dney Company employs a standard cost system for product costing.The per-unit standard cost of its product is:

Raw materials	$	14.00
Direct labor (2 direct labor hours × $8.00 per hour)		16.00
Manufacturing overhead (2 direct labor hours × $10.00 perhour)		20.00
Total standard cost per unit	$	50.00

The manufacturing overhead rate is based on a normal capacitylevel of 600,000 direct labor hours. (Normal capacity is defined asthe level of capacity needed to satisfy average customer demandover a period of two to four years. Operationally, this level ofcapacity would take into consideration sales trends and bothseasonal and cyclical factors affecting demand.) The firm has thefollowing annual manufacturing overhead budget:

Variable	$	3,585,000
Fixed		3,000,000
	$	6,585,000

Edney incurred $436,750 in direct labor cost for 55,200 directlabor hours to manufacture 26,000 units in November. Other costsincurred in November include $362,000 for fixed manufacturingoverhead and $391,500 for variable manufacturing overhead.

Required:

1. Determine each of the following for November. [Note:Indicate whether each variance is favorable (F) or unfavorable(U).]

a. The variable overhead spending variance.

b. The variable overhead efficiency variance.

c. The fixed overhead spending (budget) variance.

d. The fixed overhead production volume variance.

e. The total amount of under- or overapplied manufacturingoverhead (i.e., the total manufacturing overhead cost variance forthe period).

2. Prepare the following four journal entries: (a) to recordactual variable overhead costs, (b) to record actual fixed overheadcosts, (c) to record standard overhead costs applied to production,and (d) to record all four overhead cost variances. The companyuses a single account, Factory Overhead, to record all overheadcosts. Assume that the actual variable manufacturing overheadconsists of utilities payable of $173,500, indirect materials of$134,000 (all materials, direct and indirect, are recorded in asingle account, Materials Inventory), and $84,000 depreciation onfactory equipment (determined under the units-of-productionmethod). Assume that the fixed manufacturing overhead consists ofaccrued (i.e, unpaid) salaries of $77,000 and factory depreciationof $285,000. All unpaid salaries should be recorded in a singleaccount, Accrued Payroll.

3. Prepare the appropriate journal entry to close allmanufacturing overhead variances to the cost of goods sold (CGS)account. (Assume the cost variances you calculated above are forthe year, not the month.)