[The following information applies to the questions displayed below.]

Patel and Sons, Inc., uses a standard cost system to apply overhead costs to units produced. Practical capacity for the plant is defined as 55,800 machine hours per year, which represents 27,900 units of output. Annual budgeted fixed overhead costs are $279,000 and the budgeted variable overhead cost rate is $3.90 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 21,700 units, which took 44,800 machine hours. Actual fixed overhead costs for the year amounted to $272,000 while the actual variable overhead cost per unit was $3.80.

3)

Based on the information provided above, what was the fixed overhead spending (budget) variance for the year?

Spending (budget) variance

7,000

Favorable

What was the fixed overhead production volume variance for the year? (Do not round intermediate calculations. Round final answer to the nearest whole dollar amount.)

Production volume variance

62,000

Unfavorable

4)

Based on the information provided above, what was the variable overhead spending variance for the year? (Do not round intermediate calculations. Round your final answer to nearest whole dollar amount.)

Spending Variance

4,900

Favorable

What was the variable overhead efficiency variance for the year? (Do not round intermediate calculations. Round your final answer to nearest whole dollar amount.)

Efficiency Variance

2,730

Unfavorable

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5)

Based on the information provided above, provide the correct summary journal entries for actual and applied overhead costs (both variable and fixed) for the year. Assume that the company uses a single account, Factory Overhead, to record both actual and applied overhead. Also, assume that the only variable overhead cost was electricity and that actual fixed overhead consisted of depreciation of $170,000 and supervisory salaries of $97,000. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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Record Journal Entries (2 sets)

A) Record the actual overhead costs

B) Record the overhead costs applied to production.

Journal Options provided;

BLANK,

No journal entry required,

Accumulated depreciation-Factory

Factory (Manufacturing) Overhead

Salaries payable

Utilities Payable

Work in Process Inventory

6)

Based on the information provided above, provide the appropriate journal entries: (a) to record the overhead cost variances for the period (thereby closing out the balance in the Factory Overhead account), and (b) to close the variance accounts to the CGS account at the end of the period. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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Record Journal Entries (2 sets)

A) Record the factory overhead variances.

B) Record the entry to close the variance accounts to cost of goods sold.

Journal Options provided;

BLANK,

No journal entry required,

Cost of goods sold

Factory (Manufacturing) Overhead

Fixed overhead spending variance

Production volume variance

Variable overhead efficiency variance

Variable overhead spending variance

7)

Assume that at the end of the year management of Patel and Sons, Inc., decides that the overhead cost variances should be allocated to WIP Inventory, Finished Goods Inventory, and CGS using the following percentages: 10%, 20%, and 70%, respectively. Provide the proper journal entry to close out the manufacturing overhead variances for the year. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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Record Journal Entries (1 set)

A) Record the entry to close the variance accounts to Work in process inventory, Finished goods inventory, and Cost of goods sold.

Journal Options provided;

BLANK,

No journal entry required,

Cost of goods sold

Finished goods inventory

Fixed overhead spending variance

Production volume variance

Variable overhead efficiency variance

Variable overhead spending variance

Work in process inventory

8)

Based on the information provided above, calculate and label the following overhead variances for the year: (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)

a) Total overhead cost variance.

Total overhead variance

Unfavorable

b) Total flexible-budget variance.

Total flexible-budget variance

Favorable

c) Fixed overhead production volume variance.

Fixed overhead production volume variance

Unfavorable

9)

Based on the information provided above provide the appropriate journal entries to record: (a) actual overhead costs for the year and applied overhead costs for the year (both variable and fixed), and (b) the three manufacturing cost variances calculated. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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Record Journal Entries (3 sets)

A) Record the actual overhead costs.

B) Record the overhead costs applied to production.

C) Record the overhead variances using a two-variance approach.

Journal Options provided;

BLANK,

No journal entry required,

Accumulated depreciation Factory

Factory (manufacturing) overhead

Production volume variance

Salaries payable

Total flexible-budget variance

Utilities payable

Work in process inventory

10)

Based on the information provided above, provide an appropriate end-of-year closing entry for each of the following two independent situations: (a) the net overhead cost variance is closed entirely to Cost of Goods Sold, and (b) the net overhead variance is allocated among WIP Inventory, Finished Goods Inventory, and CGS using the following percentages: 10%, 20%, and 70%, respectively. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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Record Journal Entries (2 sets)

A) Record the net variance closed to cost of good sold.

B) Record the net variance allocated to ending inventories and Cost of goods sold.

Journal Options provided;

BLANK,

No journal entry required,

Cost of goods sold

Finished goods inventory

Production volume variance

Total flexible-budget variance

Work in process inventory