Variance Analysis and Journal Entries for Overhead he Starr Company uses a standard-cost system. Denominator output per month is 5,000 units. lop5 Standard Costs:
Direct labor, 3 hrs. @ $5.00 $15.00 Direct materials, 20 lbs @ $.30 6.00 Overhead, 20% of direct labor 3.00 Total cost per finished unit $24.00 The following production data are for the month of July 19_0:
Work in process, July 1 -0-
Units completed by July 31 4,500 Work in process, July 31 -0-
Materials purchased, 120,000 Ibs. @ $.31 $ 37,200 Materials used 105,000 Ibs.
Variable overhead incurred $ 8,500 Direct-labor use, 13,750 hrs. @ $5.10 per hr. $ 70,125 Fixed overhead incurred $ 6,000 The overhead flexible-budget formula has a variable cost component of 60¢
per standard direct-labor hour.
Prepare complete analyses of variances for materials, labor, variable overhead, and fixed overhead.
~ Prepare journal entries for the overhead incurrence and application. You may omit the entries for materials and labor.