Problem

The Platter Valley factory of Bybee Industries manufactures field boots. The cost of each boot includes direct materials, direct labor, and manufacturing overhead. The firm traces all direct costs to products, and it assigns overhead based on direct labor hours. The company budgeted $10,535 variable overhead and 2,150 direct labor hours to manufacture 4,300 pairs of boots in March. The factory used 4,000 direct labor hours in March to manufacture 4,100 pairs of boots and spent $17,100 on variable overhead during the month. For March the Platter Valley factory of Bybee Industries budgeted $88,150 of fixed overhead. Its practical capacity is 2,150 direct labor hours per month (to manufacture 4,300 pairs of boots). The actual fixed overhead incurred for the month was $91,450.

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

A. Compute the total overhead spending variance, the efficiency variance, and the fixed overhead production volume variance.

B. Determine the spending variances (both variable and fixed), the efficiency variance, and the fixed overhead production volume variance.

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

A. Compute the total flexible-budget variance and the fixed overhead production volume variance for March.

B. Determine the flexible-budget variance and the fixed overhead production volume variance for March.