Edney Company employs a standard cost system for product costing. The per-unit standard cost of its product is: Raw materials Direct labor (2 direct labor hours x $8.00 per hour) Manufacturing overhead (2 direct labor hours x $14.40 per hour) Total standard cost per unit $ 14.00 16.00 28.80 $ 58.80 The manufacturing overhead rate is based on a normal capacity level of 600,000 direct labor hours. (Normal capacity is defined as the level of capacity needed to satisfy average customer demand over a period of two to four years. Operationally, this level of capacity would take into consideration sales trends and both seasonal and cyclical factors affecting demand.) The firm has the following annual manufacturing overhead budget: Variable Fixed $ 4,620,000 4,020,000 $ 8,640,000 Edney incurred $436,750 in direct labor cost for 55,200 direct labor hours to manufacture 26,000 units in November. Other costs incurred in November include $362,000 for fixed manufacturing overhead and $391,500 for variable manufacturing overhead. Required: 1. Determine each of the following for November. [Note: Indicate whether each variance is favorable (F) or unfavorable (U).] a. The variable overhead spending variance. b. The variable overhead efficiency variance. c. The fixed overhead spending (budget) variance. d. The fixed overhead production volume variance. e. The total amount of under- or overapplied manufacturing overhead (ie., the total manufacturing overhead cost variance for the period). 2. Prepare the following four journal entries: (a) to record actual variable overhead costs, (b) to record actual fixed overhead costs, (c) to record standard overhead costs applied to production, and (d) to record all four overhead cost variances. The company uses a single account, Factory Overhead, to record all overhead costs. Assume that the actual variable manufacturing overhead consists of utilities payable of $173,500, indirect materials of $134,000 (all materials, direct and indirect, are recorded in a single account, Materials Inventory), and $84,000 depreciation on factory equipment (determined under the units-of-production method). Assume that the fixed manufacturing overhead consists of accrued (ie, unpaid) salaries of $77,000 and factory depreciation of $285,000. All unpaid salaries should be recorded in a single account, Accrued Payroll. 3. Prepare the appropriate journal entry to close all manufacturing overhead variances to the cost of goods sold (COGS) account (Assume the cost variances you calculated above are for the year, not the month.) Required 1 Required 2 Required 3 Determine each of the following for November. [Note: Indicate whether each variance is favorable (F) or unfavo a. The variable overhead spending variance. b. The variable overhead efficiency variance. c. The fixed overhead spending (budget) variance. d. The fixed overhead production volume variance. e. The total amount of under- or overapplied manufacturing overhead (i.e., the total manufacturing overhead cos the period). (For all requirements, do not round intermediate calculations. Round your final answers to the nearest whole dolla 1a. The variable overhead spending variance. 1b. The variable overhead efficiency variance. 1c. The fixed overhead spending (budget) variance. 1d. The fixed overhead production volume variance. $ 33,540 Favorable $ (24,640) Unfavorable Unfavorable Favorable + 1e. The total amount of under- or overapplied manufacturing overhead (i.e., the total manufacturing overhead cost variance for the period). $ 4,700 Underapplied Required ! Required 2 > S No Transaction General Journal Debit Credit 1 (a) Factory overhead Materials inventory 2 (b) Factory overhead Accrued payroll 3 (c) i 4 (d) Work in process inventory Factory overhead Fixed overhead spending variance Variable overhead efficiency variance lew transaction list View journal entry worksheet i No Transaction General Journal 1 (a) Cost of goods sold (CGS) Production volume variance < Required 2 Required 3 > Debit Credit