Patel and Sons Inc. uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 53,400 machine hours per year, which represents 26,700 units of output. Annual budgeted fixed factory overhead costs are $267,000 and the budgeted variable factory overhead cost rate is $3.10 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 20,600 units, which took 42,400 machine hours. Actual fixed factory overhead costs for the year amounted to $258,200 while the actual variable overhead cost per unit was $3.00.

1. Based on the information provided above, what was (a) the variable overhead spending variance for the year, and (b) the variable overhead efficiency variance for the year? Indicate whether each variance was favorable (F) or unfavorable (U).

2. Based on the information provided above, provide the correct summary journal entries for actual and applied factory overhead costs (both variable and fixed) for the year. Assume that the company uses a single account, Factory Overhead, to record both actual and applied factory overhead. Also, assume that the only variable overhead cost was electricity and that actual fixed overhead consisted of depreciation of $162,000 and supervisory salaries of $96,200 Finally, assume that both electricity expense and the supervisory salaries expense have been incurred but not yet paid (i.e., both are current liabilities). (show for A & B in picture below)

3. Based on the information provided above, provide the appropriate journal entries: (a) to record the overhead cost variances for the period (thereby closing out the balance in the Factory Overhead account), and (b) to close the variance accounts to the Cost of Goods Sold (CGS) account at the end of the period. (Example of format in picture above)

4. Assume that at the end of the year, management of Patel and Sons decides that the overhead cost variances should be allocated to WIP Inventory, Finished Goods Inventory, and Cost of Goods Sold (CGS) using the following percentages: 10%, 20%, and 70%, respectively. Provide the proper journal entry to close out the manufacturing overhead variances for the year. (Example of format in picture above).

5. Based on the information provided above, calculate the following factory overhead variances for the year. Indicate whether each variance is favorable (F) or unfavorable (U).

(a)	Total overhead variance
(b)	Total flexible-budget variance
(c)	Production volume variance

6. Based on the information provided above, prepare the appropriate journal entries to record: (a) actual factory overhead costs for the year, (b) the applied factory overhead costs for the year (both variable and fixed), and (c) the total flexible-budget variance and the production volume variance for the period. Assume that the company uses a single account, Factory Overhead, to record both actual and applied factory overhead. Also, assume that the only variable overhead cost was electricity and that actual fixed overhead consisted of depreciation of $162,000 and supervisory salaries of $96,200 Finally, assume that both electricity expense and the supervisory salaries expense have been incurred but not yet paid (i.e., both are current liabilities). (Picture above is example of format.

7. Based on the information provided above, provide an appropriate end-of-year closing entry for each of the following two independent situations: (a) the net factory overhead cost variance is closed entirely to Cost of Goods Sold (CSG), and (b) the net factory overhead variance is allocated among WIP Inventory, Finished Goods Inventory, and CGS using the following percentages: 10%, 20%, and 70%, respectively. (Example of format in picture above)

Journal entry worksheet B > Record the actual overhead costs. Note: Enter debits before credits. General Journal Debit Credit Transaction 1 Record entry Clear entry View general journal