Simpson Manufacturing has the following standard cost sheet for one of its products:

		Total
Direct materials	5 pounds at $2 per pound	$	10
Direct labor	2 hours at $25 per hour		50
Variable factory overhead	2 hours at $5 per hour		10
Fixed factory overhead	2 hours at $20 per hour		40
Cost per unit		$	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	352
Direct materials purchased and used	1,760	pounds		$	19,360
Direct labor incurred	950	hours			25,650
Variable factory overhead incurred					6,080
Fixed factory overhead incurred					15,800

Before closing the periodic accounts, the (standard cost) entries in selected accounts follow:

Account	Debit (total)				Credit (total)
Work-in-process inventory	$	213,000			$	154,640
Finished goods inventory		154,640				131,690
Cost of goods sold		131,690

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.

1 2 3 4 01 > To record various factory overhead costs. Note: Enter debits before credits. Transaction General Journal Debit Credit a Record entry Clear entry View general journal 1 2 3 4 5 To Transfer Work in Process to Factory Overhead. Note: Enter debits before credits. Transaction General Journal Debit Credit b. Record entry Clear entry View general journal 1 2 3 4 5 To increase factory overhead and record the related volume, expenditure and efficiency variances. Note: Enter debits before credits. Transaction General Journal Debit Credit C. Record entry Clear entry View general journal 1 2 3 4 5 To close all variances to cost of goods sold account. Note: Enter debits before credits. Transaction General Journal Debit Credit d.(1) Record entry Clear entry View general journal