A company uses machine hours (MHs) to assign both variable and fixed factory overhead costs to products.

Supporting data for the month:

	Budget				Actual
Fixed overhead cost for the month:
Engineering support (salaries)	$	15,800			$	17,900
Factory insurance		5,800				7,900
Property taxes (factory)		12,800				12,800
Equipment depreciation (factory)		14,600				14,600
Supervisory salaries (factory)		15,500				15,500
Set-up labor		3,200				4,600
Materials-handling labor		3,300				4,800
Total	$	71,000			$	78,100
Variable overhead costs per MH:
Electricity	$	7.00			$	7.50
Indirect material A		1.00				1.00
Indirect material B		4.00				4.00
Indirect labor: Maintenance		6.00				6.00
Manufacturing supplies		2.00				2.10
Total	$	20.00			$	20.60
Budgeted machine hours		7,100
Standard allowed MH for units produced		6,300
Actual MH worked during the month		6,400

The company uses a single overhead account, Factory Overhead, and performs a two-way analysis of the total factory overhead cost variance each month.

Required:

1. To perform the two-way variance analysis, calculate the (a) total factory overhead cost variance, (b) total flexible-budget variance, and (c) the production volume variance for the month. State whether each variance is favorable (F) or unfavorable (U).

2. Provide journal entries to record each of the following separately: (a) actual variable overhead costs, (b) actual fixed overhead costs, and (c) standard variable overhead cost applied to production, and (d) standard fixed overhead cost applied to production. Note: Accrued payroll costs are recorded in Salaries and Wages Payable, while transactions regarding indirect materials and manufacturing supplies are recorded in the Indirect Materials Inventory account.

3. Provide a single journal entry to record the two variances in Requirement 1 (i.e. total flexible-budget variance and the production volume variance).

4. Provide a single journal entry to close these two variances to the Cost of Goods Sold (COGS) account, assuming that the variances calculated above represent net overhead cost variances for the year.