Presented below is a flexible manufacturing overhead budget for Ganem Manufacturing, which manufactures fine timepieces:

Activity Index:

Standard direct labor hours 2,800 3,200 3,600 4,000 Variable costs Indirect materials $ 5,600 $ 6,400 $ 7,200 $ 8,000 Indirect labor 3,220 3,680 4,140 4,600 Utilities 7,280 8,320 9,360 10,400 Total variable 16,100 18,400 20,700 23,000 Fixed costs Supervisory salaries 1,000 1,000 1,000 1,000 Rent 3,000 3,000 3,000 3,000 Total fixed 4,000 4,000 4,000 4,000 Total costs $20,100 $22,400 $24,700 $27,000

The company applies the overhead on the basis of direct labor hours at $7.00 per direct labor hour and the standard hours per timepiece is 1/2 hour each. The company's actual production was 5,400 timepieces with 2,700 actual hours of direct labor. Normal capacity is 3,200 hours. Actual overhead was $20,200.

Instructions

(a) Compute the controllable and volume overhead variances. (b) Prepare the entries for manufacturing overhead during the period and the entry to recognize the overhead variances at the end of the period.