Janson, Inc., uses a standard costing system. The predetermined overhead rates are calculated using practical capacity. Practical capacity for a year is defined as 100,000 units requiring 20,000 standard direct labor hours. Budgeted overhead for the year is $76,000, of which $30,000 is fixed overhead. During the year, 96,000 units were produced using 19,000 direct labor hours. Actual annual overhead costs totaled $80,000, of which $29,600 is fixed overhead.

Required:

Question Content Area

1. Calculate the fixed overhead spending and volume variances.

Fixed Overhead Spending Variance	$fill in the blank d3331903e05d02b_1	FavorableUnfavorableFavorable
Fixed Overhead Volume Variance	$fill in the blank d3331903e05d02b_3	FavorableUnfavorableUnfavorable

2. Calculate the variable overhead spending and efficiency variances.

Variable Overhead Spending Variance	$fill in the blank d3331903e05d02b_5	FavorableUnfavorableUnfavorable
Variable Overhead Efficiency Variance	$fill in the blank d3331903e05d02b_7	FavorableUnfavorableFavorable

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Feedback

1. The formula for computing the fixed overhead variances are as follows (AFOH = Actual fixed overhead and BFOH = Budgeted fixed overhead): Fixed OH spending variance = AFOH -BFOH, and the volume variance = Budgeted fixed OH Applied fixed OH.

2. Variable overhead spending variance = (Actual variable OH rate (AVOR) (SVOR) Standard variable OH rate) x AH. Variable overhead efficiency variance = (AH SH) x SVOR.

Question Content Area

3. Prepare the journal entries that reflect the following:

1. Assignment of overhead to production
2. Recognition of the incurrence of actual overhead
3. Recognition of overhead variances
4. Closing out overhead variances, assuming they are not material

Note: Close the variances with a debit balance first. For compound entries, if an amount box does not require an entry, leave it blank.

a.	CashCost of Goods SoldFixed Overhead ControlFixed Overhead Spending VarianceFixed Overhead Volume VarianceMiscellaneous AccountsVariable Overhead ControlVariable Overhead Efficiency VarianceVariable Overhead Spending VarianceWork in ProcessWork in Process	Work in Process	Work in Process
	Cost of Goods SoldFixed Overhead Spending VarianceFixed Overhead Volume VarianceMiscellaneous AccountsVariable Overhead ControlVariable Overhead Efficiency VarianceVariable Overhead Spending VarianceWork in ProcessVariable Overhead Control	Variable Overhead Control	Variable Overhead Control
	Cost of Goods SoldFixed Overhead ControlFixed Overhead Spending VarianceFixed Overhead Volume VarianceMiscellaneous AccountsVariable Overhead Efficiency VarianceVariable Overhead Spending VarianceWork in ProcessFixed Overhead Control	Fixed Overhead Control	Fixed Overhead Control
b.	Cost of Goods SoldFixed Overhead Spending VarianceFixed Overhead Volume VarianceMiscellaneous AccountsVariable Overhead ControlVariable Overhead Efficiency VarianceVariable Overhead Spending VarianceWork in ProcessVariable Overhead Control	Variable Overhead Control	Variable Overhead Control
	Cost of Goods SoldFixed Overhead ControlFixed Overhead Spending VarianceFixed Overhead Volume VarianceMiscellaneous AccountsVariable Overhead Efficiency VarianceVariable Overhead Spending VarianceWork in ProcessFixed Overhead Control	Fixed Overhead Control	Fixed Overhead Control
	Cost of Goods SoldFixed Overhead ControlFixed Overhead Spending VarianceFixed Overhead Volume VarianceMiscellaneous AccountsVariable Overhead ControlVariable Overhead Efficiency VarianceVariable Overhead Spending VarianceWork in ProcessMiscellaneous Accounts	Miscellaneous Accounts	Miscellaneous Accounts
c.	CashFinished GoodsFixed Overhead Spending VarianceFixed Overhead ControlFixed Overhead Volume VarianceVariable Overhead ControlFixed Overhead Volume Variance	Fixed Overhead Volume Variance	Fixed Overhead Volume Variance
	CashFinished GoodsFixed Overhead Spending VarianceFixed Overhead ControlVariable Overhead ControlVariable Overhead Spending VarianceVariable Overhead Spending Variance	Variable Overhead Spending Variance	Variable Overhead Spending Variance
	Fixed Overhead Spending VarianceCashFinished GoodsFixed Overhead ControlVariable Overhead Efficiency VarianceVariable Overhead ControlVariable Overhead Efficiency Variance	Variable Overhead Efficiency Variance	Variable Overhead Efficiency Variance
	Cost of Goods SoldFixed Overhead Volume VarianceFixed Overhead Spending VarianceVariable Overhead Spending VarianceVariable Overhead Efficiency VarianceFixed Overhead Spending Variance	Fixed Overhead Spending Variance	Fixed Overhead Spending Variance
	CashFinished GoodsFixed Overhead ControlFixed Overhead Volume VarianceVariable Overhead Spending VarianceVariable Overhead Efficiency VarianceFixed Overhead Control	Fixed Overhead Control	Fixed Overhead Control
	CashFinished GoodsFixed Overhead Volume VarianceVariable Overhead ControlVariable Overhead Spending VarianceVariable Overhead Efficiency VarianceVariable Overhead Control	Variable Overhead Control	Variable Overhead Control
d.	CashCost of Goods SoldFixed Overhead ControlFixed Overhead Volume VarianceMiscellaneous AccountsVariable Overhead ControlVariable Overhead Efficiency VarianceVariable Overhead Spending VarianceWork in ProcessCost of Goods Sold	Cost of Goods Sold	Cost of Goods Sold
	Cost of Goods SoldFixed Overhead ControlFixed Overhead Spending VarianceFixed Overhead Volume VarianceMiscellaneous AccountsVariable Overhead ControlWork in ProcessFixed Overhead Spending Variance	Fixed Overhead Spending Variance	Fixed Overhead Spending Variance
	CashCost of Goods SoldFixed Overhead ControlFixed Overhead Spending VarianceMiscellaneous AccountsVariable Overhead ControlVariable Overhead Efficiency VarianceWork in ProcessVariable Overhead Efficiency Variance	Variable Overhead Efficiency Variance	Variable Overhead Efficiency Variance
	CashCost of Goods SoldFixed Overhead ControlFixed Overhead Volume VarianceMiscellaneous AccountsVariable Overhead ControlVariable Overhead Efficiency VarianceWork in ProcessFixed Overhead Volume Variance	Fixed Overhead Volume Variance	Fixed Overhead Volume Variance
	Cost of Goods SoldFixed Overhead ControlFixed Overhead Spending VarianceFixed Overhead Volume VarianceMiscellaneous AccountsVariable Overhead ControlVariable Overhead Efficiency VarianceVariable Overhead Spending VarianceWork in ProcessVariable Overhead Spending Variance	Variable Overhead Spending Variance	Variable Overhead Spending Variance