Overhead Application, Overhead Variances, Journal Entries Plimpton Company produces countertop ovens. Plimpton uses a standard costing system. The standard costing system relies on direct labor hours to assign overhead costs to production. The direct labor standard indicates that two direct labor hours should be used for every oven produced. The normal production volume is 100,000 units. The budgeted overhead for the coming year is as follows: $760,000 Fixed overhead Variable overhead "At normal volume. 446,000 Plimpton applies overhead on the basis of direct labor hours. During the year, Plimpton produced 97,000 units, worked 196,000 direct labor hours, and incurred actual fixed overhead costs of $770,500 and actual variable overhead costs of $437,580. Required: 1. Calculate the standard fixed overhead rate and the standard variable overhead rate. Round your answers to the nearest cent. Use rounded answers in the subsequent computations. Standard fixed overhead rate 3.80 per direct labor hour Standard variable overhead rate 2.23 per direct labor hour 2. Compute the applied fixed overhead and the applied variable overhead. Use the application rates from part (1) in your calculations. Fixed 737,200 Variable $ 432,620 5. Now assume that Plimpton's cast accounting system reveals only the total actual overhead. In this case, a three-variance analysis can be performed. Using the relationships between a three- and four-variance analysis, indicate the values for the three overhead variances. Volume variance Unfavorable Variable overhead efficiency variance $ Unfavorable Spending variance Unfavorable 6. Prepare journal entries (1) to apply overhead to production, (2) to record the actual overhead costs incurred, (3) to record the variable and fixed overhead variances, and (4) to close the variance accounts at the end of the year. Assume variances are closed to Cost of Goods Sold. If an amount box does not require an entry, leave it blank or enter "O". 1,167,880 X 1. Work in Process Variable Overhead Control 430,680 X Fixed Overhead Control 737,200 2. Variable Overhead Control 435,640 x Fixed Overhead Control 770,500 Various Accounts 1,206,140 x 3. Fixed Overhead Spending Variance 10,500 Fixed Overhead Volume Variance 22,800 2. Variable Overhead Control 435,640 X Fixed Overhead Control 770,500 Various Accounts 1,206,140 x 3. Fixed Overhead Spending Variance 10,500 Fixed Overhead Volume Variance 22,800 Variable Overhead Spending Variance 520 Variable Overhead Efficiency Variance 4,440 x Fixed Overhead Control 33,300 Variable Overhead Control 4,960 4. Cost of Goods Sold 38,260 Fixed Overhead Spending Variance 10,500 Fixed Overhead Volume Variance 22,800 Variable Overhead Spending Variance 520 X Variable Overhead Efficiency Variance 4,440 x Feedback