=+12-20 KK Variable manufacturing overhead variance analysis OBJECTIVE 3 Woollen Pillows manufactures pillows and uses a standard cost system. The 2014 operating budget is based on production of 20000 pillows with 0.5 machine-hours allowed per pillow. Variable manufacturing overhead is anticipated to be $200000.

Actual production for 2014 was 18000 pillows using 9500 machine-hours. Actual variable costs were $19 per machine-hour.

Required 1 Prepare a variance analysis of variable manufacturing overhead. Use Figure 12-4 (p. 482) for reference.

2 Prepare journal entries to record actual variable manufacturing costs incurred, variable manufacturing costs allocated and variable manufacturing overhead variances.

3 Prepare the journal entry to write off variable manufacturing overhead variances to Cost of goods sold.