Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Required information (The following information applies to the questions displayed below.) Pants R Us is a subsidiary of Gap Inc. and specializes in designing and

image text in transcribed
Required information (The following information applies to the questions displayed below.) Pants R Us is a subsidiary of Gap Inc. and specializes in designing and making unique and fashionable pants. To make each pair of pants, the cost includes direct materials, labour and manufacturing (factory) overhead, which are all typical costs of producing pants. Pants R Us has a strategy of tracing all its direct cost back to every single pair of pants, and overhead costs are assigned to the pants manufactured based on direct labour hours. Information about the production of pants are as follows: 1. In September 2020, Pants R Us budgeted $10,120 variable factory overhead cost and 2,200 direct labor hours to manufacture 4,400 pairs pants. 2. Pants R Us used 4,100 direct labor hours in September 2020 to manufacture 4,200 pairs of pants 3. Total spending on variable overhead during September 2020 was $17,200. 4. Pants Rus budgeted $92,400 in September 2020 for fixed factory overhead costs. 5. The factory's practical capacity is 2,200 direct labor hours per month to manufacture 4,400 pairs of pants), 6. Pants R Us incurred $95,800 in actual fixed overhead cost for September 2020, Assume that Pants R Us currently uses a four-variance analysis of the total factory overhead cost variance. However, management is considering the shift to a three-variance analysis. Required: 1. Compute Pants R Us' total overhead spending variance, the (variable overhead) efficiency variance, and the production volume variance for September 2020 and indicate whether each variance is favorable (F) or unfavorable (U). 2. Prepare the journal entries at the end of September 2020 to record each of the following: (a) the total overhead spending variance, (b) the (variable overhead) efficiency variance, and (c) the production volume variance. Within your journal entries, assume that all overhead costs are recorded in a single account called "Factory Overhead

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Forecasting Volatility In The Financial Markets

Authors: Stephen Satchell, John Knight

2nd Edition

0750655151, 9780750655156

More Books

Students also viewed these Accounting questions

Question

Describe some variables used to measure the value added of HRM

Answered: 1 week ago

Question

Critically evaluate research on the HRMperformance relationship

Answered: 1 week ago