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Item 5

Item 5 12.5 points

Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows:

	Standard Quantity		Standard Price (Rate)			Standard Unit Cost
Direct materials (plastic)	12	sq ft.	$	0.72	per sq. ft.		$8.64
Direct labor	0.25	hr.	$	12.20	per hr.		3.05
Variable manufacturing overhead (based on direct labor hours)	0.25	hr.	$	1.20	per hr.		0.30
Fixed manufacturing overhead ($378,000 900,000 units)							0.42

Parker Plastic had the following actual results for the past year:

Number of units produced and sold		1,000,000
Number of square feet of plastic used		11,800,000
Cost of plastic purchased and used	$	8,260,000
Number of labor hours worked		245,000
Direct labor cost	$	2,891,000
Variable overhead cost	$	318,500
Fixed overhead cost	$	355,000

Required: Calculate Parker Plastics fixed overhead spending and volume variances and its over- or underapplied fixed overhead. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)