Montreal Scholastic Supply Company uses a standard-costing system. The firm estimates that it will operate its manufacturing facilities at 800,000 machine hours for the year. The estimate for total budgeted overhead is $2,000,000. The standard variable-overhead rate is estimated to be $2 per machine hour or $6 per unit. The actual data For the year are presented below.

Actual finished units ........... 250,000

Actual machine hours .......... 764,000

Actual variable overhead ........$1,701,000

Actual fixed overhead .........$ 392,000

Required:

1. Compute the following variances. Indicate whether each is favorable or unfavorable, where appropriate.

a. Variable-overhead spending variance.

b. Variable-overhead efficiency variance.

c. Fixed-overhead budget variance.

d. Fixed-overhead volume variance.

2. Prepare journal entries to

• Record the incurrence of actual variable overhead and actual fixed overhead.

• Add variable and fixed overhead to Work-in-Process Inventory.

• Close under applied or over applied overhead into Cost of Goods Sold.