Newkirk Sporting Goods Co. manufactures baseballs. According to Newkirk's 2019 budget, the company planned to incur $180,000 of fixed manufacturing overhead costs to make 200,000 baseballs. Newkirk actually produced 187,000 balls, incurring $177,600 of actual fixed manufacturing overhead costs. Newkirk establishes its predetermined overhead rate on the basis of the planned volume of production (expected number of baseballs).
Required
a. Calculate the predetermined overhead rate.
b. Determine the fixed cost spending variance and indicate whether it is favorable (F) or unfavorable (U).
c. Determine the fixed cost volume variance and indicate whether it is favorable (F) or unfavorable (U).