150 F for last year. Should any cost item be given special attention? Explain. JECTIVE * Problem 11-38 Overhead Application, Overhead Variances Tavera Company uses a standard cost system. The direct labour standard indicates that five direct labour hours should be used for every unit produced. Tuvera produces one product. The normal production volume is 120,000 units of this product. The budgeted overhead for the coming year is as follows: Fixed overhead $2,160,000 Variable overhead 1,440,000 * At normal volume Tavera applies overhead on the basis of direct labour hours. During the year, Tavera produced 118,600 units worked 592,300 direct labour hours, and incurred actual fixed overhead costs of $2,150,400 and actual variable overhead costs of 51.422,800 Required: 1. Calculate the standard fixed overhead rate and the standard variable overhead rate. 2. Compute the applied fixed overhead and the applied variable overhead. What is the total fixed overhead variance? Total variable overhead variance? 3. CONCEPTUAL CONNECTION Break down the total fixed overhead variance into a spend ing variance and a volume variance. Discuss the significance of cach. 4. CONCEPTUAL CONNECTION Compute the variable overhead spending and efficiency variances Discuss the significance of cach. Journal entries for overhead variances were not discussed in this chapter. Typically, the overhead variance entries happen at the end of the year. Assume that applied fixed (var able) overhead is accumulated on the credit side of the fixed (Variable) overhead control account Actual fixed (variable) overhead costs are accumulated on the debit side of the respective control accounts. At the end of the year, the balance in each control account is the total fined variable) variance Create accounts for each of the four overhead var ances and close out the total variances to each of these four arance onts These tout varance accounts are the usually dispused of by closing them to cost of Goods Sold (COGS Form s with two to four other student and prepare the real Check figures: 1. SPOR $3.60; SVOR Total FOR $15.00 a ces to COGS Sulla ) ENG