ABC 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 +(STT*10). 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 ($)	1,705,000
Actual fixed overhead ($)	402,000

Required:

1. Compute the following variances. Indicate whether each is favorable or unfavorable, where appropriate.

1. Variable-overhead spending variance. (0.25 points)

2. Variable-overhead efficiency variance. (0.25 points)

3. Fixed-overhead budget variance. (0.25 points)

4. Fixed-overhead volume variance. (0.25 points)

2. Prepare journal entries to

1. Record the incurrence of actual variable overhead and actual fixed overhead. (0.25 points)
2. Add variable and fixed overhead to Work-in-Process Inventory. (0.25 points)