Straightforward four-variance overhead analysis. Lopez Company uses a standard-cost 1.V ariable MOH spending system in its manufacturing plant for auto parts. The standard cost of a particular auto part, variance, $17,800 U based on a denominator level of 4,000 output. units per year, included 6 machine-hours of variable manufacturing overhead at $8 per hour and 6 machine-hours of fixed manufacturing overhead at $15 per hour. Actual output achieved was 4,400 units. Variable manufacturing overhead incurred was $245,000. Fixed manufacturing overhead incurred was $373,000.

Actual incurred machine-hours were 28,400.

REQUIRED 1. Prepare an analysis of all variable manufacturing overhead and fixed manufacturing overhead variances, using the four-variance analysis in Exhibit 8-12, p. 387.

2. Prepare journal entries using the four-variance analysis.

3. Describe how individual variable manufacturing overhead items are controlled from day to day. Also, describe how individual fixed manufacturing overhead items are controlled.

LO1