Cost Management: A Strategic Emphasis 7th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 8

Fixed Overhead Cost Variances; Journal Entries (Continuation of Exercise 15-29) For March the Platter Valley factory of Bybee Industries budgeted $90,000 of fixed overhead. Its practical capacity is 2,500 direct labor hours per month (to manufacture 5,000 pairs of boots).
The factory spent 2,700 direct labor hours in March to manufacture 4,800 pairs of boots. The actual fixed overhead incurred for the month was $92,000.
Required
1. Compute the spending (budget) variance and the fixed overhead production volume variance for March.
2. Compute the fixed overhead flexible-budget variance.
3. Provide appropriate journal entries to record the fixed overhead spending and fixed overhead production volume variances for March.
4. Comment on the factory's results in March with regard to fixed overhead costs.