Patel and sons inc. uses a standard cost system to apply factory overhead costs to units produced. practical capacity for the plant is defined as 50,000 machine hours per year, which represents 25,000 units of output. annual budgeted fixed factory overhead costs are $250,000 and the budgeted variable factory overhead cost rate is $4 per unit. factory overhead costs are applied on the basis of standard machine hours allowed for units produced. budgeted and actual output for the year was 20,000 units, which took 41,000 machine hours. actual fixed factory overhead costs for the year amounted to $245,000, while the actual variable overhead cost per unit was $3.90.a. based on the information provided above, what was the fixed overhead spending (budget) variance for the year?
b. what was the fixed overhead production volume variance for the year?
c. based on the information provided above, what was the variable overhead spending variance for the year?
d. what was the variable overhead efficiency variance for the year?

Shrieves casting company is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by sidney johnson, a recently graduated mba. the production line would be set up in unused space in the main plant. the machinery’s invoice price would be approximately $200,000, another $10,000 in shipping charges would be required, and it would cost an additional $30,000 to install the equipment. the machinery has an economic life of 4 years, and shrieves has obtained a special tax ruling that places the equipment in the macrs 3-year class. the machinery is expected to have a salvage value of $25,000 after 4 years of use. the new line would generate incremental sales of 1,250 units per year for 4 years at an incremental cost of $100 per unit in the first year, excluding depreciation. each unit can be sold for $200 in the first year. the sales price and cost are both expected to increase by 3% per year due to inflation. further, to handle the new line, the firm’s net working capital would have to increase by an amount equal to 12% of sales revenues. the firm’s tax rate is 40%, and its overall weighted average cost of capital, which is the risk-adjusted cost of capital for an average project (r), is 10%. define “incremental cash flow.” (1) should you subtract interest expense or dividends when calculating project cash flow?