In all problems involving variances, use “F” and “U” to indicate favorable and unfavorab...

In all problems involving variances, use “F” and “U” to indicate favorable and unfavorable variances, respectively.

(Appendix) All variances; four variances for factory overhead

Minneapolis Manufacturing Inc. manufactures a small electric motor that is a replacement part for the more popular gas furnaces. The standard cost card shows the product requirements as follows:

Factory overhead rates are based on normal 100% capacity and the following flexible budgets:

The company produced 3,500 units, using 18,375 direct labor hours and incurring the following overhead costs:

Factory overhead–fixed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $61,950

Factory overhead–variable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $33,710

Required:

1. Calculate the factory overhead: variable-spending, variable efficiency, fixed-spending, and production-volume variances.

2. Does the net variance represent under- or overapplied factory overhead?