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The Delcarmen Company uses standard costing in its manufacturing plant for auto parts. The standard cost of a particular auto part, based on a
The Delcarmen Company uses standard costing in its manufacturing plant for auto parts. The standard cost of a particular auto part, based on a denominator level of 3,600 output units per year, included 5 machine-hours of variable manufacturing overhead at $7 per hour and 5 machine-hours of fixed manufacturing overhead at $17 per hour. Actual output produced was 3,900 units. Variable manufacturing overhead incurred was $250,000. Fixed manufacturing overhead incurred was $385,000. Actual machine-hours were 27,000. Requirement 1. Prepare an analysis of all variable manufacturing overhead and fixed manufacturing overhead variances, using the 4-variance analysis. Begin by calculating the following amounts for the variable overhead. Actual Costs Fixed OH Incurred Actual Costs Actual Input Variable OH Now complete the table below for the fixed manufacturing overhead. Same Budgeted Lump Sum Incurred X Budgeted Rate Regardless of Output Level Flexible Budget Flexible Budget Allocated Overhead Allocated Overhead Now complete the 4-variance analysis using the amounts you calculated above. (If no variance exists, leave the dollar value blank. Label the variance as favorable (F), unfavorable (U) or never a variance (N).) 4-Variance Analysis Variable OH Fixed OH Date Spending Variance Efficiency Variance Requirement 2. Prepare journal entries using the 4-variance analysis. Record the actual variable manufacturing overhead incurred. (Record debits first, then credits. Exclude explanations from any journal entries.) Journal Entry Accounts Production-Volume Variance Debit Credit Record the variable manufacturing overhead allocated. Date Journal Entry Accounts Record the variable manufacturing overhead variances for the period. Debit Credit Date Record the actual fixed overhead costs incurred. Date Journal Entry Accounts Journal Entry Accounts Debit Debit Credit Credit Date Record the actual fixed overhead costs incurred. Date Journal Entry Accounts Journal Entry Accounts Debit Debit Credit Credit Record the fixed overhead costs allocated. Date Journal Entry Date Accounts Record the fixed overhead variances for the period. Journal Entry Accounts Debit Debit Credit Credit
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