Question - Geller Cellars produce bourbon in two almost identical production facilities-the Monica and Ross plants. The managers of both plants each budgeted $80,000 of factory overhead cost to manufacture 1,000 units (bottles of bourbon) in each plant for the current year. The overhead at the Monica plant is assumed to be all fixed, while half of the budgeted factory overhead at the Ross plant is considered variable (and the other half is fixed). At the end of the year, each plant manufactured 850 units. The actual factory overhead incurred by each plant amounted to $80,000.
1. For each plant, compute the flexible budget and production volume variances for total overhead. Indicate whether each variance is favorable or unfavorable.
2. Which the plant manager play a better job in controlling overhead costs? Explain briefly.