Overhead information for Cran-Mar Company for October follows:

Total factory overhead cost incurred	$	30,400
Budgeted fixed factory overhead cost	$	7,129
Total standard overhead rate per machine hour (MH)	$	4.94
Standard variable factory overhead rate per MH	$	3.40
Standard MHs allowed for the units manufactured		4,000
1. What is the standard fixed factory overhead rate per machine hour (MH)? 2. What is the denominator activity level that was used to establish the fixed factory overhead application rate? 3. Two-way analysis (breakdown) of the total factory overhead cost variance: Using panel B in Exhibit 15.7 as a guide, calculate the following factory overhead cost variances for October and indicate whether each variance is favorable (F) or unfavorable (U). a. Total flexible-budget variance. b. Production volume variance. c. Total overhead cost variance. 4. Confirm your answer to 3b above by using the model at the bottom of Exhibit 15.6 to calculate the production volume variance and indicate whether the variance is favorable (F) or unfavorable (U).

EXHIBIT 15.6 General Model: Four-Variance Analysis of Total Factory Overhead Cost Variance (A) (B) (D) Flexible Budget Based on Inputs Standard Overhead Cost Applied Cost Incurred Variable Overhead (C) Flexible Budget Based on Outputs Total standard quantity of the activity for applying variable overhead to the output of the period x Standard variable overhead rate Actual quantity of the activity for applying variable overhead X Standard variable overhead rate Amount spent Variable overhead spending variance Variable overhead efficiency variance Fixed Overhead Total standard quantity of the activity for applying overhead to the output of the period x Standard fixed overhead rate Amount spent Budgeted (lump-sum) amount Fixed overhead spending (budget) variance Production (denominator) volume variance