PLEASE SHOW YOUR WORK

PLEASE SHOW YOUR WORK

Velma, Inc. uses a normal job-order costing system. The company has two departments, and predetermined overhead rates are computed for each department. Estimated cost and operating data are as follows for the year 2005: Department A Department B 50,000 Estimated direct labour hours 10,000 10,000 50,000 Estimated machine hours $200,000 $400,000 Estimated overhead At the end of 2005, Velma reported the following actual cost and operating data Department A Department B 50,000 Direct labour hours 10,000 10,000 50,000 Machine hours $220,000 $440,000 Overhead Required 1. Assume that Department A uses direct labour hours and Department B uses machine hours to apply overhead. Compute a predetermined overhead rate for each department 2. Compute the applied overhead for each department. Prepare the journal entry that assigns applied overhead to production. 3. Compute the under- or over applied overhead for each department. What is the total overhead variance for the firm? 4. Prepare the journal entry to dispose of this variance