Johnny Lee Incorporated produces a Inne of small gasoline-powered engines that can be used In a varlety of residential machines, ranging from different types of lawnmowers, to snowblowers, to garden tools (such as tillers and weed-whackers). The basic product Ine consists of three different models, each meant to fill the needs of a different market. Assume you are the cost accountant for this company and that you have been asked by the owner of the company to construct a flexlble budget for factory overhead costs, which seem to be growing faster than revenues. Currently, the company uses machine hours (MHs) as the basis for assigning both varlable and fixed factory overhead costs to products. Within the relevant range of output, you determine that the following factory overhead costs per month should occur: engineering support, $17,000; Insurance on the manufacturing facility, $7,000; property taxes on the manufacturing facility, $14,000; depreclation on manufacturing equipment, $15,800; and Indirect labor costs of supervisory salarles, $16,800, setup labor, $4,400, and materlals handiling, $4,500. Varlable factory overhead costs are budgeted at $20.00 per machine hour, as follows: electricity, $7.00; Indirect materlals for Materlal A of $1.00 and for Materlal B of $4.00; Indirect labor-maIntenance, $6.00; and production-related supplies, $2.00 Assume that In a given month (December) the standard allowed machine hours for output produced was 7,500 . Also, assume that the denominator activity level for setting the predetermined overhead application rate is 7,950 machine hours per month. Actual fixed overhead costs for the month of December were as follows: engineering support, $21,500 (salarles); factory Insurance, $11,500; property taxes, $14,000; equipment depreclation, $15,800; supervlsory salarles, $16,800; setup labor, $8,200; materlalshandling labor, $8,400. The actual varlable overhead cost per machine hour worked in December was equal to the standard cost except for the following two Items: electricity, $7.50 per machine hour; and manufacturing supplies, $2.10 per machine hour. All salary and wage amounts have not yet been paid. The company used 7,600 machine hours In December. The company uses a single overhead account, Factory Overhead, and performs a two-way analysis of the total factory overhead cost varlance each month. Requlred: 1. Calculate (a) the total factory overhead cost varlance, (b) the total flexible-budget varlance, and (c) the productlon volume varlance for the month. State whether each varlance was favorable (F) or unfavorable (U). 2. Provide the summary journal entry to record (separately) each of the following: (a) actual varlable overhead costs, (b) actual fixed overhead costs, (c) standard varlable overhead cost applied to production, and (d) standard fixed overhead cost applied to production. Note: Accrued payroll costs are recorded In Salarles and Wages Payable, while transactions regarding Indirect materlals and manufacturing supplies are recorded In the Indirect Materlals Inventory account. 3. Provide a single journal entry to record the two factory overhead cost varlances for the month. 4. Assume that the varlances calculated above represent net overhead cost varlances for the year. Provide the required journal entry to close these two varlances to the Cost of Goods Sold (COGS) account. Johnny Lee Incorporated produces a Inne of small gasoline-powered engines that can be used In a varlety of residential machines, ranging from different types of lawnmowers, to snowblowers, to garden tools (such as tillers and weed-whackers). The basic product Ine consists of three different models, each meant to fill the needs of a different market. Assume you are the cost accountant for this company and that you have been asked by the owner of the company to construct a flexlble budget for factory overhead costs, which seem to be growing faster than revenues. Currently, the company uses machine hours (MHs) as the basis for assigning both varlable and fixed factory overhead costs to products. Within the relevant range of output, you determine that the following factory overhead costs per month should occur: engineering support, $17,000; Insurance on the manufacturing facility, $7,000; property taxes on the manufacturing facility, $14,000; depreclation on manufacturing equipment, $15,800; and Indirect labor costs of supervisory salarles, $16,800, setup labor, $4,400, and materlals handiling, $4,500. Varlable factory overhead costs are budgeted at $20.00 per machine hour, as follows: electricity, $7.00; Indirect materlals for Materlal A of $1.00 and for Materlal B of $4.00; Indirect labor-maIntenance, $6.00; and production-related supplies, $2.00 Assume that In a given month (December) the standard allowed machine hours for output produced was 7,500 . Also, assume that the denominator activity level for setting the predetermined overhead application rate is 7,950 machine hours per month. Actual fixed overhead costs for the month of December were as follows: engineering support, $21,500 (salarles); factory Insurance, $11,500; property taxes, $14,000; equipment depreclation, $15,800; supervlsory salarles, $16,800; setup labor, $8,200; materlalshandling labor, $8,400. The actual varlable overhead cost per machine hour worked in December was equal to the standard cost except for the following two Items: electricity, $7.50 per machine hour; and manufacturing supplies, $2.10 per machine hour. All salary and wage amounts have not yet been paid. The company used 7,600 machine hours In December. The company uses a single overhead account, Factory Overhead, and performs a two-way analysis of the total factory overhead cost varlance each month. Requlred: 1. Calculate (a) the total factory overhead cost varlance, (b) the total flexible-budget varlance, and (c) the productlon volume varlance for the month. State whether each varlance was favorable (F) or unfavorable (U). 2. Provide the summary journal entry to record (separately) each of the following: (a) actual varlable overhead costs, (b) actual fixed overhead costs, (c) standard varlable overhead cost applied to production, and (d) standard fixed overhead cost applied to production. Note: Accrued payroll costs are recorded In Salarles and Wages Payable, while transactions regarding Indirect materlals and manufacturing supplies are recorded In the Indirect Materlals Inventory account. 3. Provide a single journal entry to record the two factory overhead cost varlances for the month. 4. Assume that the varlances calculated above represent net overhead cost varlances for the year. Provide the required journal entry to close these two varlances to the Cost of Goods Sold (COGS) account