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Variable Factory Overhead Variances; Journal Entries 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.
[LO 15-1, 15-2]
[LO 15-1, 15-2]
[LO 15-2, 15-3]
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656 Part Three Operational-Level Control
blo17029_ch15_621-670.indd 656 02/20/18 09:49 AM
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. Provide the appropriate journal entry to record the variable overhead spending variance and a second
entry to record the variable overhead efficiency variance for March. Assume that the company uses a
single account, Factory Overhead, to record overhead costs.
3. Comment on the factory’s operation in March with regard to variable factory overhead cost
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