Fanning Manufacturing Company produces a component part of a top secret military communication device. Standard production and cost data for the part, Product X, follow:

Planned production		20,000	units
Per unit direct materials		1.90	pounds	@	$	2.50	per pound
Per unit direct labor		2.70	hours	@	$	7.10	per hour
Total estimated fixed overhead costs	$	460,000

Fanning purchased and used 41,070 pounds of material at an average cost of $2.55 per pound. Labor usage amounted to 52,580 hours at an average of $7.19 per hour. Actual production amounted to 20,800 units. Actual fixed overhead costs amounted to $494,000. The company completed and sold all inventory for $1,920,000.

Required

Calculate the fixed cost spending and volume variances and indicate whether they are favorable (F) or unfavorable (U).

Determine the amount of gross margin Fanning would report on the year-end income statement.

Spending variance	$
Volume variance	$

Gross margin