Burton Company presents you with the following monthly factory overhead budgets that were prepared at the beginning of the year.

At the end of the month, analysis of the cost records reveal that the following factory overhead was incurred in operating at 58,000 machine-hours:

Required:

a. Compute the cost estimating formula.

b. Determine the factory overhead application rate using an estimated capacity of 60,000 hours.

c. Determine variances for each of the factory overhead items, indicating whether they are favorable or unfavorable.

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Machine-Hours 50,000 60,000 Supplies..... $120,000 $144,000 Indirect labor.. 67,500 81.000 Utilities.... 162,500 195,000 Supervision salaries 10,000 10,000 Depreciation.. 9,000 9,000 Insurance.... 8,000 8,000 Property taxes. 15,000 15,000 Total $392,000 $462,000