Four OH variances; journal entries Kemp Manufacturing set 56,000 direct labor hours as the annual capacity measure for computing its predetermined variable overhead rate. At that level, budgeted variable overhead costs are $252,000. Kemp will apply budgeted fixed overhead of $112,320 on the basis of 3,120 budgeted machine hours for the year. Both machine hours and fixed overhead costs are expected to be incurred evenly each month. During March, Kemp incurred 4,720 direct labor hours and 240 machine hours. Actual variable and fixed overhead were $21,060 and $9,120, respectively. The standard times allowed for March production were 4,784 direct labor hours and 232 machine hours. a. Using the four-variance approach, determine the overhead variances for March. Note: Do not use negative signs with your answers. VOH Spending Variance Actual VOH Budgeted VOH VOH Spending Variance $ 21,240 x $ 21,060 x $ 180U X Budgeted VOH $ 21,240 Applied VOH $ 21,528 VOH Efficiency Variance VOH Efficiency Variance 288F Actual FOH FOH Spending Variance Budgeted FOH = FOH Spending Variance $ 9,360 240 F $ 9,120 FOH Volume Variance = FOH Volume Variance Budgeted FOH $ 9,120 X Applied FOH $ 8,352 - $ 768 X U b. Prepare all journal entries related to overhead for Kemp Manufacturing for March. Note: Record any multiple debits or any multiple credits in alphabetical order by account name. Account Debit Credit 0 9,120 21,240 x - 0 O 30,360 x 29,880 0 0 8,352 21,528 0 Fixed Manufacturing Overhead Control Variable Manufacturing Overhead Control Various accounts To record actual overhead cost for March Work in Process Inventory Fixed Manufacturing Overhead Control - Variable Manufacturing Overhead Control To apply overhead to work in process for March Variable Manufacturing Overhead Control Variable Overhead Efficiency Variance Variable Overhead Spending Variance A To record variable overhead variances for March Volume Variance Fixed Manufacturing Overhead Control Fixed Manufacturing Overhead Spending Variance - To record fixed overhead variances for March 468 0 0 288 O 180 768 x 0 O 528 x O 240