Patel and Sons Incorporated uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 50,000 machine hours per year, which represents 25,000 units of output. Annual budgeted fixed factory overhead costs are $250,000 and the budgeted variable factory overhead cost rate is $4 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 20,000 units, which took 41,000 machine hours. Actual fixed factory overhead costs for the year amounted to $245,000, while the actual variable overhead cost per unit was $3.90.

Brief Exercise 15-20 (Static) Assume that at the end of the year, management of Patel [LO 15-4]

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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal Entry Selection List:

No journal entry required

Accumulate depreciation - Factory

Cost of goods sold

Factory Overhead

Finished goods inventory

Fixed overhead spending variance

Production volume variance

Salaries payable

Total flexible budget variance

Utilities payable

Variable overhead efficiency variance

Variable overhead spending variance

Work in process inventory

Journal entry worksheet Record the entry to close the variance accounts to Work in process inventory, Finished goods inventory, and Cost of goods sold. Note: Enter debits before credits