Foxconn Inc. is a multinational electronics manufacturer that is most well known for producing various components found in smartphones. Foxconn services many companies such as Apple, Microsoft, Nintendo, among others. Foxconn's most basic product line contains 3 different models that are meant to meet the needs of the various markets that it serves. You, a manager in the financial planning and cost budgeting department, have been assigned the task to construct a flexible budget for factory overhead costs. Foxconn currently allocates variable and fixed factory overhead costs using machine hours (MH) as a basis.

Within the relevant range of output, the following factory fixed overhead costs per month should occur:

• Indirect labor costs of supervisory salaries:$15,300
• Setup labor:$2,900
• Materials handling:$3,000
• Engineering support:$15,500
• Manufacturing facility insurance fees of$5,500 andproperty taxes of$12,500
• Depreciation on manufacturing equipment:$14,300.

Variable factory overhead costs are budgeted at $21.00 per machine hour based on the following: electricity, $7.00; Material A indirect materials$2.00 and Material B indirect materials$4.00; indirect labormaintenance, $6.00; and production-related supplies, $2.00.

The standard allowed machine hours for output produced was 6,000 for a budgeted month. The denominator activity level for setting the predetermined overhead application rate is 6,900 machine hours per month.

Actual fixed overhead costs that were incurred in the past monthwere as follows: engineering support, $17,000 (salaries); factory insurance, $7,000; property taxes, $12,500; equipment depreciation, $14,300; supervisory salaries, $15,300; setup labor, $3,700; materials-handling labor, $3,900. The actual variable overhead cost per machine hour worked in the past month was equal to the standard cost except for the following two items: electricity, $7.50 per machine hour; and manufacturing supplies, $2.10 per machine hour. All salary and wage amounts have not yet been paid. The company used 6,100 machine hours in the last month.

The company uses a single overhead account, Factory Overhead, and performs a two-way analysis of the total factory overhead cost variance each month.

Required:

1. To address the task assigned to you as Foxconn's manager of financial planning and cost budgeting, calculate the (a) total factory overhead cost variance, (b) total flexible-budget variance, and (c) the production volume variance for the month. Additionally, assuming the CEO of Foxconn does not have a strong background in management accounting, ensure that your calculation shows whether the variance was favorable (F) or unfavorable (U).

2. In addition to calculating the required variances, provide the summary journal entries to record the following items for the financial accounting team: (a) actual fixed overhead costs,(b) actual variable overhead costs, and (c) standard fixed overhead cost applied to production, and (d) standard variable overhead cost applied to production.Note: Accrued payroll costs are recorded in Salaries and Wages Payable, while transactions regarding indirect materials and manufacturing supplies are recorded in the Indirect Materials Inventory account.