Reference no: EM133011182

The Platter Valley factory of Bybee Industries manufactures field boots. The cost of each boot includes direct materials, direct labor, and manufacturing (factory) overhead. The firm traces all direct cots to products, and it assigns overhead cost to products based on direct labor hours. The company budgeted $10,000 variable factory overhead cost $92,500 for fixed factory overhead cost and 2,500 direct labor hours (its practical capacity) to manufacture 5,000 pairs of boots in March. The factory used 4,700 direct labor hours in March to manufacture 4,800 pairs of boots and spent $17,800 on variable overhead during the month. The actual fixed overhead cost incurred for the month was $96,500.

The Platter Valley factory of Bybee Industries uses a 2-variance analysis of the total factory overhead variance.

Required:

Problem 1.) Compute the total flexible-budget variance for overhead and the production volume variance for March. What was the total factory overhead cost variance for March? Indicate whether each variance is favorable (F) or unfavorable (U).

Problem 2.) Determine the three components of the total flexible budget variance for overhead. (i.e. the variable overhead spending variance, the variable overhead efficiency variance, and the fixed overhead spending variance): in addition show the production volume variance for March. Indicate whether each variance is favorable (F) or unfavorable (U).