Simpson Manufacturing has the following standard cost sheet for one of its products: Direct materials Direct labor Variable factory overhead Fixed factory overhead Cost per unit 5 pounds at $2 per pound 2 hours at $25 per hour 2 hours at $5 per hour 2 hours at $20 per hour Total $ 10 50 10 40 $ 110 The company uses a standard cost system and applies factory overhead cost based on direct labor hours and determines the factory overhead rate based on a practical capacity of 400 units of the product. Simpson has the following actual operating results for the year just completed: Units manufactured Direct materials purchased and used Direct labor incurred Variable factory overhead incurred 374 1,870 pounds 820 hours $ 20,570 22,140 5,248 15,800 Fixed factory overhead incurred Before closing the periodic accounts, the (standard cost) entries in selected accounts follow: Account Work-in-process inventory Finished goods inventory Cost of goods sold Debit (total) Credit (total) $ 174,000 141,640 118,690 $ 141,640 118,690 Required: 1. Determine for the period the following items: a. Flexible budget for variable factory overhead cost based on output for the period. b. Total variable overhead cost applied to production during the period. c. Total budgeted fixed factory overhead cost. d. Total fixed factory overhead cost applied to production during the period. 2. Compute the following factory overhead cost variances using a four-variance analysis: a. Total variable overhead cost variance. b. Variable overhead spending variance. c. Variable overhead efficiency variance. d. Total underapplied or overapplied variable overhead. e. Fixed overhead spending variance. f. Fixed overhead production volume variance. g. Total fixed overhead cost variance. h. Total underapplied or overapplied fixed overhead. 3. Compute the following factory overhead cost variances using three-variance analysis: a. Overhead spending variance. b. Overhead efficiency variance. c. Fixed overhead production volume variance. 4. Compute the total overhead flexible-budget variance and the fixed overhead production volume variance using a two-variance analysis. 5. Using a single overhead account (e.g., Factory Overhead), make proper journal entries for: a. Incurrence of factory overhead costs. b. Application of factory overhead costs to production. c. Identification of overhead variances assuming that the firm uses the four-variance analysis identified in requirement 2. d. Close all factory overhead cost items and their variances of the period if: (1) The firm closes all variances to the Cost of Goods Sold account. (2) The firm prorates variances to the inventory accounts and the Cost of Goods Sold account. Required 1 Required 2 Required 3 Required 4 Required 5 Determine for the period the following items: a. b. Flexible budget for variable factory overhead cost based on output for the period Total variable overhead cost applied to production during the period $ 3,740 $ 3,740 C. Total budgeted fixed factory overhead cost $ 16,000 d. Total fixed factory overhead cost applied to production during the period $ 14,960 < Required 1 Required 2 > Required 1 Required 2 Required 3 Required 4 Required 5 Compute the following factory overhead cost variances using a four-variance analysis: a. Total variable overhead cost variance $ 1,508 Unfavorable b. Variable overhead spending variance $ 1,148 Unfavorable C. Variable overhead efficiency variance $ 360 Unfavorable d. Total underapplied or overapplied variable overhead $ 1,508 Underapplied e. Fixed overhead spending variance $ 200 Favorable f. Fixed overhead production volume variance $ 1,040 Unfavorable g. Total fixed overhead cost variance $ 840 Unfavorable h. Total underapplied or overapplied fixed overhead 69 $ 840 Underapplied < Required 1 Required 3 > Required 1 Required 2 Required 3 Required 4 Required 5 Compute the following factory overhead cost variances using three-variance analysis: a. Overhead spending variance $ 948 Unfavorable b. Overhead efficiency variance $ 360 Unfavorable C. Fixed overhead production volume variance $ 1,040 Unfavorable < Required 2 Required 4 > Required 1 Required 2 Required 3 Required 4 Required 5 Compute the total overhead flexible-budget variance and the fixed overhead production analysis. Total overhead flexible-budget variance $ 1,308 Unfavorable Fixed overhead production volume variance $ 1,040 Unfavorable < Required 3 Required 5 > Required 1 Required 2 Required 3 Required 4 Required 5 Using a single overhead account (e.g., Factory Overhead), make proper journal entries for: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) a. Incurrence of factory overhead costs. b. Application of factory overhead costs to production. c. Identification of overhead variances assuming that the firm uses the four-variance analysis identified in requirement 2. d. Close all factory overhead cost items and their variances of the period if: (1) The firm closes all variances to the Cost of Goods Sold account. (2) The firm prorates variances to the inventory accounts and the Cost of Goods Sold account. No Transaction 1 a Factory overhead General Journal Cash, Prepaid accounts, Accumulated depreciation, and/or Sun 2 b. Work-in-process inventory Factory overhead 3 C. Variable factory overhead efficiency variance 4 d.(1) Variable factory overhead spending variance Fixed overhead production volume variance Fixed factory overhead spending variance Factory overhead Cost of goods sold Fixed factory overhead spending variance Variable factory overhead efficiency variance Variable factory overhead spending variance 0000 00000 Show less Debit 21,048 Credit 21,048 18,700 18,700 360 1,148 1,040 200 2,348 2,348 200 360 1,148 1 No Transaction a Factory overhead General Journal Cash, Prepaid accounts, Accumulated depreciation, and/or Sun Debit Credit 21,048 21,048 2 b. Work-in-process inventory Factory overhead 18,700 18,700 3 C. Variable factory overhead efficiency variance 360 Variable factory overhead spending variance 1,148 Fixed overhead production volume variance 1,040 Fixed factory overhead spending variance Factory overhead 200 2,348 4 d. (1) Cost of goods sold Fixed factory overhead spending variance Variable factory overhead efficiency variance Variable factory overhead spending variance Fixed overhead production volume variance 5 d.(2) Fixed factory overhead spending variance Cost of goods sold Work-in-process inventory Finished goods inventory Variable factory overhead efficiency variance Variable factory overhead spending variance 2,348 200 360 1,148 1,040 200 360 1,148