Sari Inc. has a fully automated production facility in which almost 97 percent of overhead costs are driven by machine hours. As the companys cost accountant, you have computed the following overhead variances for May:

Variable overhead spending variance	$88,400	F
Variable overhead efficiency variance	107,120	F
Fixed overhead spending variance	72,800	U
Fixed overhead volume variance	52,000	U

The companys president is concerned about the variance amounts and has asked you to show her how the variances were computed and to answer several questions. Budgeted fixed overhead for the month is $2,600,000; the predetermined variable and fixed overhead rates are, respectively, $20 and $40 per machine hour. Budgeted capacity is 52,000 units.

a. Using the four-variance approach, prepare an overhead analysis. Note: Do not use negative signs with your answers.

FOH spending variance
Actual FOH	-	Budgeted FOH	=	FOH Spending Variance
	-		=		Unfavorable

FOH volume variance
Budgeted FOH	-	Applied FOH	=	FOH Volume Variance
	-		=		Unfavorable

VOH spending variance
Actual VOH	-	VOH Rate x Actual Hours	=	VOH Spending Variance
	-		=		Favorable

VOH efficiency variance
VOH Rate x Actual Hours	-	Applied VOH	=	VOH Efficiency Variance
	-		=		Favorable

b. What is the standard number of machine hours allowed for each unit of output? MHs per unit

c. How many actual hours were worked in May? hours

d. What is the total spending variance? $

Note: Do not use a negative sign in your answers. e. How would the overhead variances be closed if the three-variance approach were used and the variances are considered insignificant?

Note: Record any multiple debits or any multiple credits in alphabetical order by account name.

Account Name	Debit	Credit
Journal entry
Journal entry
Journal entry
Journal entry
To dispose of the overhead variances

Please answer all parts of the question.