Three-Way Overhead Analysis (Appendix 2). The manufacturing overhead costs for Marley's Bobsled Factory of Kingston, Jamaica are on a standard cost system. The flexible overhead budget formula (in Jamaican dollars) is:

Each bobsled requires 2 hours of machine time. Normal production is 25,000 bobsleds per month. During the most recent period, 42,000 hours of work produced 20,000 bobsleds. The actual manufacturing overhead costs totaled \(\mathrm{J} \$ 350,000\), of which J \(\$ 120,000\) was fixed cost.
\section*{Required:}
1. Calculate the underapplied or overapplied manufacturing overhead.

2. How much of the total overhead variance is fixed cost and how much is variable cost?
3. Compute the spending and efficiency variances.
4. Compute the capacity variance.
5. Prove that the spending, efficiency, and capacity variances account for the total overhead variance.

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Fixed costs Variable costs J$100,000 per period J$ 10 per bobsled