Question
Derf Company allocated overhead on the basis of direct labor hours. Two direct labor hours are required for each unit of product. Planned production for
Derf Company allocated overhead on the basis of direct labor hours. Two direct labor hours are required for each unit of product. Planned production for the period was set at 9,000 units. Manufacturing overhead is estimated at $135,000 for the period (20% of this amount is fixed). 17,200 direct labor hours were actually used to produce 8,500 units. Actual variable manufacturing overhead cost was $108,500. Actual fixed manufacturing overhead cost was $28,000.
A. Calculate the variable overhead spending and quantity (efficiency) variances.
B. Determine the fixed overhead spending and production volume variances.
C. Prepare the journal entries to record the overhead variances.
D. Prepare the journal entries to close the overhead variances. Assume the following account balances before pro-ration:
WIP $10,000
FG $25,000
COGS $150,000
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