Montreal Scholastic Supply Company uses a standard-costing system. The firm estimates that it will operate its manufacturing facilities at 800,000 machine hours for the year. The estimate for total budgeted overhead is $2,000,000. The standard variable-overhead rate is estimated to be $2 per machine hour or $6 per unit. The actual data for the year are presented below.

Actual finished units ............................................................................................................................................... 250,000 Actual machine hours ............................................................................................................................................. 764,000 Actual variable overhead ....................................................................................................................................... $1,701,000 Actual fixed overhead ............................................................................................................................................ $ 392,000 Required:
1. Compute the following variances. Indicate whether each is favorable or unfavorable, where appropriate.

a. Variable-overhead spending variance.

b. Variable-overhead efficiency variance.

c. Fixed-overhead budget variance.

d. Fixed-overhead volume variance.
2. Prepare journal entries to • Record the incurrence of actual variable overhead and actual fixed overhead.
• Add variable and fixed overhead to Work-in-Process Inventory.
• Close underapplied or overapplied overhead into Cost of Goods Sold.