the division of American Auto Company uses standard costing system for its production of airbags. Accounting records from the most recent month are given below:

Actual variable manufacturing overhead costs incurred$585,235

Budgeted variable manufacturing overhead cost rate$7.10Per machine hour

Actual fixed manufacturing overhead costs incurred$148,925

Budgeted fixed manufacturing overhead costs$147,000

Budgeted machine hours for the period70,000

Budgeted machine hours allowed for per unit of output1.50Machine hours

Units of output produced during the month55,000

Actual machine hours used during the month80,500

Required:

a) Calculate the overhead variances for both fixed and variable overhead costs.

b) Prepare journal entries when the overhead costs are incurred and applied to WIP. Also present journal entries for recognizing OH cost variances.

c) Prepare journal entries for disposing off the overhead cost variances.