(Four-variance approach; journal entries) Vermeil Manufacturing set 60,000 di¬ rect labor hours as the 2006 capacity measure for computing its predeter¬ mined variable overhead rate. At that level, budgeted variable overhead costs are $270,000. Vermeil will apply budgeted fixed overhead of $118,800 on the basis of 3,300 budgeted machine hours for the year. Both machine hours and fixed overhead costs are expected to be incurred evenly each month.

During March 2006, Vermeil incurred 4,900 direct labor hours and 250 machine hours. Variable and fixed overhead were $21,275 and $10,600, re¬ spectively. The standard times allowed for March production were 4,955 di¬ rect labor hours and 240 machine hours.

a. Using the four-variance approach, determine the overhead variances for March 2006.

b. Prepare all journal entries related to overhead for Vermeil Manufacturing for March 2006.

LO.1