The Platter Valley factory of Bybee Industries manufactures field boots. The cost of each boot...
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Accounting
The Platter Valley factory of Bybee Industries manufactures field boots. The cost of each boot includes direct materials, direct labor, and manufacturing (factory) overhead. The firm traces all direct costs to products, and it assigns overhead cost to products based on direct labor hours. The company budgeted $15,000 variable factory overhead cost and 2,500 direct labor hours to manufacture 5,000 pairs of boots in March. The factory used 2,700 direct labor hours in March to manufacture 4,800 pairs of boots and spent $15,600 on variable overhead during the month.
Required
1. Compute the factory overhead flexible-budget variance, the factory overhead spending variance, and the efficiency variance for variable factory overhead for March. Round each variance to the nearest whole number, and state whether each variance is favorable (F) or unfavorable (U).
2. Comment on the factorys operation in March with regard to variable factory overhead cost.
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