Overhead Variances, Four-Variance Analysis, Journal Entries 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: 1. Calculate the fixed overhead spending and volume variances. Fixed Overhead Spending Variance 400 Favorable Fixed Overhead Volume Variance - 1,200 Unfavorable 2. Calculate the variable overhead spending and efficiency variances. Variable Overhead Spending Variance 46,000 x Favorable Variable Overhead Efficiency Variance 43,200 x Favorable Feedback Check My Work 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) SVOR. 3. Prepare the journal entries that reflect the following: a. Assignment of overhead to production b. Recognition of the incurrence of actual overhead c. Recognition of overhead variances d. Closing out overhead variances, assuminn the 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. Work in Process Variable Overhead Control Fixed Overhead Control 89 9 b. Variable Overhead Control HII III II Fixed Overhead Control Miscellaneous Accounts c. Fixed Overhead Volume Variance Variable Overhead Spending Variance Variable Overhead Efficiency Variance Fixed Overhead Spending Variance Fixed Overhead Control Variable Overhead Control d. Cost of Goods Sold Fixed Overhead Spending Variance Variable Overhead Efficiency Variance Fixed Overhead Volume Variance Variable Overhead Spending Variance lll