=+12-23 KK Straightforward 4-variance overhead analysis OBJECTIVE 5 Chan Ltd uses standard costing in its manufacturing plant for car parts. The standard cost of a particular car part, based on a denominator level of 4000 output units per year, included 6 machine-hours of variable manufacturing overhead at $8 per hour and 6 machine-hours of fixed manufacturing overhead at $15 per hour. Actual output produced was 4400 units. Variable manufacturing overhead incurred was $245000. Fixed manufacturing overhead incurred was $373000. Actual machine-hours were 28400.

Required 1 Prepare an analysis of all variable manufacturing overhead and fixed manufacturing overhead variances, using the 4-variance analysis in Figure 12-4 (p. 482).

2 Prepare journal entries using the 4-variance analysis.

3 Describe how individual fixed manufacturing overhead items are controlled from day to day.

4 Discuss possible causes of the fixed manufacturing overhead variances.