The following information relates to Watson, Inc.'s overhead costs for the month Click the icon to view the information.) Requirements 1. Compute the overhead variances for the month: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance 2. Explain why the variances are favorable or unfavorable Requirement 1. Compute the overhead variances for the month variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance and fixed overhead volume variance Begin by selecting the formulas needed to compute the variable overhead (VOH) and fixed overhead (FOH) variances, and then compute each variance amount (Actual cost - Standard cost) x Actual hours = VOH cost vanance (Actual hours - Standard hours allowed) x Standard cost = VoH efficiency variance Actual overhead - Budgeted overhead Budgeted overhead - Allocated overhead E FOH cost variance = = FOH volume variance Data Table CA UVE Static budget variable overhead $ 8,000 Static budget fixed overhead $ 3,000 Static budget direct labor hours 1,000 hours Static budget number of units 5,000 units Watson allocates manufacturing overhead to production based on standard direct labor hours. Last month, Watson reported the following actual results: actual variable overhead, $10,000; actual fixed overhead, $2,830; actual production of 7,200 units at 0.25 direct labor hours per unit. The standard direct labor time is 02 direct labor hours per unit (1,000 static direct labor hours / 5,000 static units) Print Done Entl Help Me Solve This Out hea ain Question Help nei The following information relates to Watson, Inc.'s overhead costs for the month: Ov (Click the icon to view the information.) sal Requirements 1. Compute the overhead variances for the month: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance. 2. Explain why the variances are favorable or unfavorable. 101 COS hou ver SI SI de Requirement 1. Compute the overhead variances for the month: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance. Let's begin by calculating the variable overhead cost (VOH) variance. The variable overhead cost variance which measures the difference between the actual variable overhead (Actual hours Actual cost) and the standard variable overhead for the actual allocation base incurred (standard cost). This variance measures how well the business keeps unit costs of variable overhead inputs within standards. Our cost variance will be the difference between what was actually incurred in variable overhead costs and the budgeted cost based on the actual hours used. Actual VOH (Actual hours x Actual cost) - Actual hours * Standard cost ) VOH cost variance 10,900 . 3,400 5 ) = $ 6,100 Now, let's calculate the efficiency variance. The variable overhead efficiency variance measures the difference in the actual allocation tan base (actual quantity) and the amount of the allocation base that should have been used (standard quantity). This variance measures olla how well the business uses its variable overhead inputs. Remember that the efficiency variance is the difference between the standard cost of the actual hours used and the standard cost of the standard hours allowed. lire Cinnan net tatl This question is complete. Move your cursor over or tap on the red arrows to see incorrect answers. SI SI Vat xet Antal hire Condhari nila Vu linn Tirol amel Help Me Solve This mpul rhed indi lain Question Help emel st var lount COS hou ve - ed ( The following information relates to Watson, Inc.'s overhead costs for the month: dov (Click the icon to view the information) sel Requirements 1. Compute the overhead variances for the month: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance 2. Explain why the variances are favorable or unfavorable. Actual hours Standard hours allowed) Standard cost VOH efficiency variance 3,400 2,720 x 5 5.00 3,400 Now, indicate if each variance is favorable or unfavorable. Remember, a cost variance is favorable if the company spent fewer dollars than standard and is unfavorable if the company spent more dollars than standard. An efficiency variance is favorable if the company used fewer hours than standard and unfavorable if the company used more hours than standard SI VOH cost variance $ SI VOH officiency variance $ Next, let's compute the fixed overhead (FOH) cost and volume variances. We'll begin with the fixed overhead cost (FOH) variance. This fixed overhead cost variance measures the difference between actual fixed overhead and budgeted fixed overhead to determine the controllable portion of total fixed overhead variance. This variance measures how well the business keeps fixed overhead within standard. Go ahead and complete the calculation now. olla Actual FOH Budgeted FOH FOH cost variance 2,790 Sirer $ 3,200 410 dire stat This question is complete. Move your cursor over or tap on the red arrows to see incorrect answers. All parts showing 6,100F 3,400 U si SI Nal stan ixes $ $ Now, compute the fixed overhead volume variance. The fixed overhead volume variance measures the difference between the budgeted fixed overhead and theamount of overhead that should have been allocated to jobs based on the output. This variance measures how fixed overhead is allocated when actual volume is not equal to budgeted volume. Use the formula below to determine the volume variance Budgeted FOH Allocated FOH Volume variance 3,200 $ 5,440 2,240 Now, indicate if the variance is favorable or unfavorable. Remember, a cost variance is favorable if the company spent fewer dollars than standard and is unfavorable if the company spent more dollars than standard. A fixed overhead volume variance is labeled as favorable if the company allocated more fixed overhead than was budgeted, and unfavorable if it allocated less fixed overhead than was budgeted. FOH cost variance $ FOH volume variance $ 2,240 F Requirement 2. Explain why the variances are favorable or unfavorable A cost variance measures how well the business keeps unit costs of material and labor inputs within standards. An efficiency (or quantity) variance measures how well the business uses its materials or human resources. If a cost or efficiency variance is unfavorable it means This question is complete, Move your cursor over or tap on the red arrows to see incorrect answers. 410 F al All parte shown Premium, Inc. uses a standard cost system and provides the following information (Click the icon to view the information.) Premium allocates manufacturing overhead to production based on standard direct labor hours. Premium reported the following actual results for 2018: actual number of units produced, 1,000; actual variable overhead, $3,800; actual fixed overhead, $3,500; actual direct labor hours, 1,800. Read the requirements Requirement 1. Compute the variable overhead cost and efficiency variances and fixed overhead cost and volume variances. Begin with the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency variances, and identity whether each variance is favorable (F) or unfavorable (U) (Abbreviations used AC - actual cost; AQ = actual quantity: FOH fixed overhead; SC = standard cost, s - standard quantity, VOH variable overhead.) Formula Variance VOH cost variance VOH efficiency variance Data Table Requirements $ 2,200 $ 3,300 Static budget variable overhead Static budget fixed overhead Static budget direct labor hours Static budget number of units Standard direct labor hours 1. Compute the variable overhead cost and efficiency variances and fixed overhead cost and volume variances 2. Explain why the variances are favorable or untavorable. 1.100 hours 550 units 2 hours per unit Print Done Print Done Help Me Solve This . Question Help Premium, Inc. uses a standard cost system and provides the following information za (Click the icon to view the information.) Premium allocates manufacturing overhead to production based on standard direct labor hours. Premium reported the following actual results for 2018: actual number of units produced, 1,000; actual variable overhead, $3,800; actual fixed overhead, $3,500; actual direct labor hours, 1,800. Read the requirements Variable Dat 2.00 per hr 1,700 hours Cic ad tic Overhead Actual quantity at Actual cost (Actual VOH] $ 3,800 Standard cost (SC) $ Actual quantity (AQ) Standard quantity (SQ) 2,000 hours Compute the variable overhead cost and efficiency variances using the amounts we have previously determined, and identify whether each variance is favorable (F) or unfavorable (U). The variance is favorable when actual amounts are less than standards and unfavorable when actual amounts exceed standards. Formula Variance VOH cost variance Actual VOH - (SC XAQ) = $3,800 - $ 2.00 1,700 ) = $ 400 U VOH efficiency variance (AQ - SQ)X SC =( 1,700 2,000 ) x $ 2.00 = $ 600 Now let's take a look at the fixed overhead cost and volume variances. Best will use a slightly different approach to analyze the fixed minchandanan Dammhne that fiunt meteen nat nantat in chenne in intent within the minunnt het then when an This question is complete. Move your cursor over or tap on the red arrows to see incorrect answers. All parts showing Close fic tic nda F from any list or enter any number in the input fields and then click Check Answer. S Clear All aining Check Answer MacBook Pro ial n emei and to co mall prod Help Me Solve This nere Question Help Premium, Inc, uses a standard cost system and provides the following information vith reag Click the icon to view the information.) lard Premium allocates manufacturing overhead to production based on standard direct labor hours. Premium reported the following actual results for 2018: actual number of units produced, 1,000; actual variable overhead, $3,800; actual fixed overhead, $3,500; actual direct labor hours, 1,800 ost v Read the requirements. fficiel Now let's take a look at the fixed overhead cost and volume variances. Best will use a slightly different approach to analyze the fixed overhead variances. Remember that fixed costs are not expected to change in total within the relevant range, but they do change per unit when there is a change in volume. To analyze fixed overhead costs, we will need three amounts: Actual fixed overhead costs incurred Budgeted fixed overhead costs Dati Allocated fixed overhead costs Begin by identifying the actual fixed overhead (FOH) costs incurred, the budgeted FOH costs, and the allocated FOH costs. Note that we are given the actual and budgeted FOH in the information given. We must calculate allocated fixed overhead costs by multiplying the standard fixed overhead allocation rate by the standard quantity of direct labor hours, which we previously determined to be 2,000 hours. Fixed Static Overhead Static Actual fixed overhead costs incurred $ 3,500 Budgeted fixed overhead costs $ 1,500 Standa Allocated fixed overhead costs $ 4,000 Now compute the fixed overhead cost and volume variances using the amounts you identified above. This question is complete. Move your cursor over or tap on the red arrows to see incorrect answers. All parts showing Close ad Static Static se from any list or enter any number in the input fields and then click Check Answer, arts emaining Clear All Check Answer MacBook Pro Help Me Solve This Question Help $ Premium, Inc. uses a standard cost system and provides the following information. (Click the icon to view the information.) Premium allocates manufacturing overhead to production based on standard direct labor hours. Premium reported the following actual results for 2018: actual number of units produced, 1,000; actual variable overhead, $3,800; actual fixed overhead, $3,500; actual direct labor hours, 1,800 Read the requirements Now compute the fixed overhead cost and volume variances using the amounts you identified above. Formula Variance FOH cost variance Actual FOH. Budgeted FOH = $ 3,500 $ 1.500 = 2,000 FOH volume variance Bugeted FOH - Allocated FOH = $1,500 $ 4,000 $ 2,500 F Requirement 2. Explain why the variances are favorable or unfavorable. Cost variances (VOH or FOH) are labeled as favorable if the company spent less and unfavorable if the company spent more. We compare budgeted costs to actual costs to find cost variances. Review each of the cost variances calculated in Requirement 1. Did Best actually spend more or less than budgeted? Efficiency variances (VOH) compare the actual use of resources used to allocate overhead to production (direct labor hours in our problem) to a standard amount based on actual production. Did Best use more hours to produce the 1,000 units than would be expected at two direct labor hours per unit? If so, then the efficiency variance is unfavorable. Volume variances (FOH) also compare the use of resources (direct labor in this problem) but they compare a standard amount to a budgeted amount. Review your calculation for this variance. Did Best's standard number of hours (actual number of units produced multiplied by a standard of two direct labor hours per unit) exceed the budgeted hours (static budget)? If so, then the company applied more fixed overhead than was budgeted and the volume variance is labeled as favorable. This question is complete. Move your cursor over or tap on the red arrows to see incorrect answers. All parts showing Close im any list or enter any number in the input fields and then click Check Answer. ng Clear All Check Answer MacBook Pro Premium Company uses a standard cost system and reports the following information for 2018 (Click the icon to view the information) Premium Company reported the following variances M Chick the icon to view the varios Premium produced 1,000 units of finished product in 2018 Read the requirements Begin by journalizing the purchase of direct materials on account, including the related arance Proper Date Accounts and Explanation Debit Credit Requirements Record the journal entries to record direct materials, direct labor, variable oved, and Gendaverhead, assuming al expenditures were on account and here were no beginning or ending balances in the inventory accounts al materials purchased were used in production, and at goods produced were sold). Record ne pourral entries to record the transfer to Finished Goods Inventory and Cost of Goods Sold fomt the journal entry for Sales Revenue) Adjust the Manufacturing Overhead account Record debit fest the credits Select the explanation on the Lastne of the jumal entry table) Data Table Print Done Data Table Standards 3 yards of cloth per unitat 51.10 per yard 2 direct labor hours per unit at $9.75 per hour Overhead allocated at $4.00 per direct labor hour Actual 2.400 yards of cloth were purchased at $1.15 per yard Employees worked 1400 hours and were paid $9.25 per hour Actual variable overhead was $2.200 Actual food overhead was $4.600 $ Drect materials cost variance Direct materials officiency variance Direct labor cost variance Direct labor efficiency variance Variatie overhead cost variance Variable overhead officiency variance Fired overhead coat variance Flad overhead volume variance 120 U 660 F 700 F 5.850 F 800 U 300F 900 U Print Done Choose from any stor enter any number in the periods and then click Check Answer 2.100 F 7 parts remaining Print Done Check Answer Help Me Solve This purch Question Help Premium Company uses a standard cost system and reports the Premium Company reported the following variances: following information for 2018: (Click the icon to view the variances.) (Click the icon to view the information.) Premium produced 1,000 units of finished product in 2018. Read the requirements Actual quantity of material used Standard cost Total cost at standard 2,700 * $ 1.00 2,700 Calculate the actual cost of the materials purchased. Actual quantity of material used * Actual cost = Total actual cost of materials 2,700 x $ 1.05 2,835 Now journalize the purchase of direct materials on account, including the related variance. Recall that Premium's direct materials cost variance was $135 unfavorable. An unfavorable variance means more expense has been incurred than planned and would have a debit balance. (Prepare a single compound journal entry) Date Accounts and Explanation Debit Credit Raw Materials Inventory 2,700 Direct Materials Cost Variance 135 Accounts Payable 2,835 Purchased direct materials. Record the use of direct materials, including the related variance. This question is complete. Move your cursor over or tap on the red arrows to see incorrect answers. All parts showing Close th per hours cate of cloth orked do ovo overhe enter any number in the input fields and then click Check Answer. Print Done MacBook information) Click the icon to view the variances.) Help Me Solve This Question Help DO Premium Company uses a standard cost system and reports the Premium Company reported the following variances: following information for 2018: (Click the icon to view the variances.) (Click the icon to view the information.) Premium produced 1,000 units of finished product in 2018. Read the requirements Record the use of direct materials, including the related variance. In the next transaction, Premium debits Work-in-Process Inventory for the standard cost of the standard quantity of direct materials that should have been used to make 1,000 units of the company's product in 2018. This maintains Work-in-Process Inventory at standard cost. Raw Materials Inventory is credited for the actual quantity of materials put into production (2,700 yards of cloth) at the standard cost (1.00 per yard). The difference will be the Direct Materials Efficiency. Variance Calculate the standard input quantities at standard costs now Standard quantity of direct materials * Standard cost Standard cost of direct materials 3,000 1.00 3,000 Record the use of direct materials now. Recall that Premium's Direct Materials Efficiency Variance was $300 favorable. A favorable variance has a credit balance and is a contra-expense. (Prepare a single compound journal entry.; } Accounts and explanation Debit Credit Work-in-Process Inventory Direct Materials Efficiency Variance Raw Materials Inventory 2.700 Used direct materials X $ Date tod 3,000 300 lott Ked ove erhe This question is complete. Move your cursor over or tap on the red arrows to see incorrect answers. All parts showing Close nter any number in the input fields and then click Check Answer. br, varie on ac ccounts ere sol entory the Ma expla Premium Company uses a standard cost system and reports the Premium Company reported the following variances: following information for 2018: (Click the icon to view the variances.) (Click the icon to view the information.) Premium produced 1,000 units of finished product in 2018. Read the requirements Record the incurrence of direct labor. In the next transaction, Work-in-Process Inventory is debited for the 10.25 per hour standard cost of the standard quantity of direct labor hours that should have been used to make 1,000 units of the company's product in 2018. This maintains Work-in-Process Inventory at standard cost. Wages Payable is credited for the actual cost the actual hours worked at the actual wage rate) because this is the amount Premium must pay the workers. Both the Direct Labor Cost Variance and the Direct Labor Efficiency Variance will also be adjusted for their respective amounts, which are given in the problem statement First calculate the standard quantities at standard costs. Standard quantity of direct labor hours * Standard cost Standard cost of labor 2,000 $ 10.25 = $ 20,500 Now, calculate the actual quantities at actual prices Actual quantity of labor used Actual cost Actual cost of labor 1,400 9.75 13,650 Journalize the incurrance and assignment of direct labor costs, including the related variances. Recall that Premium's Direct Labor Cost Variance was $700 favorable, and the Direct Labor Efficiency Variance was $6,150 favorable. (Prepare a single compound journal entry) Accounts and Explanation Debit Credit 1 Date Help Me Solve This Question Help or Ol bod ere eni the Premium Company uses a standard cost system and reports the Premium Company reported the following variances: following information for 2018: Click the icon to view the variances.) Click the icon to view the information.) Premium produced 1,000 units of finished product in 2018. Read the requirements. Journalize the incurrance and assignment of direct labor costs, including the related variances. Recall that Premium's Direct Labor Cost Variance was $700 favorable, and the Direct Labor Efficiency Variance was $6,150 favorable. (Prepare a single compound journal entry.) Date Accounts and explanation Debit Credit Work-in-Process Inventory 20,500 Direct Labor Cost Variance 700 Direct Labor Efficiency Variance 6,150 Wages Payable 13,650 Direct labor costs incurred. Record the actual overhead cost for 2018. I We have been told that Premium's actual variable overhead for 2018 was $1,800 and actual fixed overhead was $4,200. The sum of these two amounts is debited to the Manufacturing Overhead account and is credited to various other accounts, which may include Cash, Accounts Payable, Accumulated Depreciation, Prepaid Insurance, or other related overhead accounts. (In this scenario, we'll call the account "Various Accounts") Go ahead and journalize the entry to show the actual manufacturing overhead costs incurred. Accounts and explanation Debit Credit This question is complete. Move your cursor over or tap on the red arrows to see incorrect answers. All parts showing Close Date rany number in the input fields and then click Check Answer Print Done Che MacBook Pro Help Me Solve This Question Help Credit Premium Company uses a standard cost system and reports the Premium Company reported the following variances: following information for 2018: Click the icon to view the variances.) (Click the icon to view the information.) Premium produced 1,000 units of finished product in 2018. Read the requirements. Go ahead and journalize the entry to show the actual manufacturing overhead costs incurred. Date Accounts and Explanation Debit Manufacturing Overhead 6,000 Various Accounts 6,000 Manufacturing overhead costs incurred. Record the overhead allocated to Work-in-Process Inventory. Remember that overhead is applied to production using the standard overhead rate of 4.00 per direct labor hour multiplied by the standard quantity of direct labor hours, which we determined to be 2.000 hours in a previous step. When overhead is applied to inventory, the Work-in-Process inventory account is debited, and the Manufacturing Overhead account is credited. Date Accounts and explanation Debit Credit Work-in-Process Inventory 8,000 Manufacturing Overhead 8,000 Manufacturing overhead costs allocated. Journalize the movement of all production from Work-in-Process Inventory. of ars ec ott ed ve he da Inne Help Me Solve This Question Help or er en th BE Premium Company uses a standard cost system and reports the Premium Company reported the following variances: following information for 2018: (Click the icon to view the variances.) (Click the icon to view the information.) Premium produced 1,000 units of finished product in 2018. Read the requirements Once the production process is complete, all of the previously allocated standard costs are transferred from Work-in-Process Inventory to Finished Goods Inventory. Record the entry. Date Accounts and Explanation Debit Credit Finished Goods Inventory 31,500 Work-in-Process Inventory 31,500 Completed goods transferred. Record the entry to transfer the cost of sales at standard cost. Upon the sale of the items, Premium will transfer all of the standard costs from Finished Goods Inventory to Cost of Goods Sold. Record the entry. Accounts and Explanation Debit Credit Cost of Goods Sold 31,500 Finished Goods Inventory 31,500 Cost of sales at standard cost. Close the Manufacturing overhead account and record the overhead variances. This question is complete. Move your cursor over or tap on the red arrows to see incorrect answers. All parts showing Close Date ? Help Me Solve This Question Help or. or CCO ere ent the es Premium Company uses a standard cost system and reports the Premium Company reported the following variances: following information for 2018: Click the icon to view the variances.) (Click the icon to view the information.) Premium produced 1,000 units of finished product in 2018. Read the requirements Cost of sales at standard cost. Close the Manufacturing overhead account and record the overhead variances. Remember that we debited the Manufacturing Overhead account by the actual overhead costs incurred, $6,000, and credited it by the overhead costs applied to the inventory, $8,000. The difference is due to the variable and fixed overhead variances. To close out the Manufacturing Overhead account, we must record these variances, debiting the Manufacturing Overhead account for the difference. The debit to Manufacturing Overhead indicates that the actual overhead costs debited to the account were less than the allocated amounts credited to the account and overhead was overallocated. Remember that the unfavorable variable overhead and fixed overhead cost variances will be recorded with debits and the favorable variable overhead officiency and fixed overhead volume variances will be recorded with credits. (Prepare a single compound journal entry) Date Accounts and explanation Debit Credit Manufacturing Overhead 2,000 Variable Overhead Cost Variance 1,200 Fixed Overhead Cost Variance Variable Overhead Efficiency Variance 1,200 Fixed Overhead Volume Variance 2,200 To adjust Manufacturing Overhead. 200 This question is complete. Move your cursor over or tap on the red arrows to see incorrect answers. All parts showing Close The following information relates to Watson, Inc.'s overhead costs for the month Click the icon to view the information.) Requirements 1. Compute the overhead variances for the month: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance 2. Explain why the variances are favorable or unfavorable Requirement 1. Compute the overhead variances for the month variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance and fixed overhead volume variance Begin by selecting the formulas needed to compute the variable overhead (VOH) and fixed overhead (FOH) variances, and then compute each variance amount (Actual cost - Standard cost) x Actual hours = VOH cost vanance (Actual hours - Standard hours allowed) x Standard cost = VoH efficiency variance Actual overhead - Budgeted overhead Budgeted overhead - Allocated overhead E FOH cost variance = = FOH volume variance Data Table CA UVE Static budget variable overhead $ 8,000 Static budget fixed overhead $ 3,000 Static budget direct labor hours 1,000 hours Static budget number of units 5,000 units Watson allocates manufacturing overhead to production based on standard direct labor hours. Last month, Watson reported the following actual results: actual variable overhead, $10,000; actual fixed overhead, $2,830; actual production of 7,200 units at 0.25 direct labor hours per unit. The standard direct labor time is 02 direct labor hours per unit (1,000 static direct labor hours / 5,000 static units) Print Done Entl Help Me Solve This Out hea ain Question Help nei The following information relates to Watson, Inc.'s overhead costs for the month: Ov (Click the icon to view the information.) sal Requirements 1. Compute the overhead variances for the month: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance. 2. Explain why the variances are favorable or unfavorable. 101 COS hou ver SI SI de Requirement 1. Compute the overhead variances for the month: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance. Let's begin by calculating the variable overhead cost (VOH) variance. The variable overhead cost variance which measures the difference between the actual variable overhead (Actual hours Actual cost) and the standard variable overhead for the actual allocation base incurred (standard cost). This variance measures how well the business keeps unit costs of variable overhead inputs within standards. Our cost variance will be the difference between what was actually incurred in variable overhead costs and the budgeted cost based on the actual hours used. Actual VOH (Actual hours x Actual cost) - Actual hours * Standard cost ) VOH cost variance 10,900 . 3,400 5 ) = $ 6,100 Now, let's calculate the efficiency variance. The variable overhead efficiency variance measures the difference in the actual allocation tan base (actual quantity) and the amount of the allocation base that should have been used (standard quantity). This variance measures olla how well the business uses its variable overhead inputs. Remember that the efficiency variance is the difference between the standard cost of the actual hours used and the standard cost of the standard hours allowed. lire Cinnan net tatl This question is complete. Move your cursor over or tap on the red arrows to see incorrect answers. SI SI Vat xet Antal hire Condhari nila Vu linn Tirol amel Help Me Solve This mpul rhed indi lain Question Help emel st var lount COS hou ve - ed ( The following information relates to Watson, Inc.'s overhead costs for the month: dov (Click the icon to view the information) sel Requirements 1. Compute the overhead variances for the month: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance 2. Explain why the variances are favorable or unfavorable. Actual hours Standard hours allowed) Standard cost VOH efficiency variance 3,400 2,720 x 5 5.00 3,400 Now, indicate if each variance is favorable or unfavorable. Remember, a cost variance is favorable if the company spent fewer dollars than standard and is unfavorable if the company spent more dollars than standard. An efficiency variance is favorable if the company used fewer hours than standard and unfavorable if the company used more hours than standard SI VOH cost variance $ SI VOH officiency variance $ Next, let's compute the fixed overhead (FOH) cost and volume variances. We'll begin with the fixed overhead cost (FOH) variance. This fixed overhead cost variance measures the difference between actual fixed overhead and budgeted fixed overhead to determine the controllable portion of total fixed overhead variance. This variance measures how well the business keeps fixed overhead within standard. Go ahead and complete the calculation now. olla Actual FOH Budgeted FOH FOH cost variance 2,790 Sirer $ 3,200 410 dire stat This question is complete. Move your cursor over or tap on the red arrows to see incorrect answers. All parts showing 6,100F 3,400 U si SI Nal stan ixes $ $ Now, compute the fixed overhead volume variance. The fixed overhead volume variance measures the difference between the budgeted fixed overhead and theamount of overhead that should have been allocated to jobs based on the output. This variance measures how fixed overhead is allocated when actual volume is not equal to budgeted volume. Use the formula below to determine the volume variance Budgeted FOH Allocated FOH Volume variance 3,200 $ 5,440 2,240 Now, indicate if the variance is favorable or unfavorable. Remember, a cost variance is favorable if the company spent fewer dollars than standard and is unfavorable if the company spent more dollars than standard. A fixed overhead volume variance is labeled as favorable if the company allocated more fixed overhead than was budgeted, and unfavorable if it allocated less fixed overhead than was budgeted. FOH cost variance $ FOH volume variance $ 2,240 F Requirement 2. Explain why the variances are favorable or unfavorable A cost variance measures how well the business keeps unit costs of material and labor inputs within standards. An efficiency (or quantity) variance measures how well the business uses its materials or human resources. If a cost or efficiency variance is unfavorable it means This question is complete, Move your cursor over or tap on the red arrows to see incorrect answers. 410 F al All parte shown Premium, Inc. uses a standard cost system and provides the following information (Click the icon to view the information.) Premium allocates manufacturing overhead to production based on standard direct labor hours. Premium reported the following actual results for 2018: actual number of units produced, 1,000; actual variable overhead, $3,800; actual fixed overhead, $3,500; actual direct labor hours, 1,800. Read the requirements Requirement 1. Compute the variable overhead cost and efficiency variances and fixed overhead cost and volume variances. Begin with the variable overhead cost and efficiency variances. Select the required formulas, compute the variable overhead cost and efficiency variances, and identity whether each variance is favorable (F) or unfavorable (U) (Abbreviations used AC - actual cost; AQ = actual quantity: FOH fixed overhead; SC = standard cost, s - standard quantity, VOH variable overhead.) Formula Variance VOH cost variance VOH efficiency variance Data Table Requirements $ 2,200 $ 3,300 Static budget variable overhead Static budget fixed overhead Static budget direct labor hours Static budget number of units Standard direct labor hours 1. Compute the variable overhead cost and efficiency variances and fixed overhead cost and volume variances 2. Explain why the variances are favorable or untavorable. 1.100 hours 550 units 2 hours per unit Print Done Print Done Help Me Solve This . Question Help Premium, Inc. uses a standard cost system and provides the following information za (Click the icon to view the information.) Premium allocates manufacturing overhead to production based on standard direct labor hours. Premium reported the following actual results for 2018: actual number of units produced, 1,000; actual variable overhead, $3,800; actual fixed overhead, $3,500; actual direct labor hours, 1,800. Read the requirements Variable Dat 2.00 per hr 1,700 hours Cic ad tic Overhead Actual quantity at Actual cost (Actual VOH] $ 3,800 Standard cost (SC) $ Actual quantity (AQ) Standard quantity (SQ) 2,000 hours Compute the variable overhead cost and efficiency variances using the amounts we have previously determined, and identify whether each variance is favorable (F) or unfavorable (U). The variance is favorable when actual amounts are less than standards and unfavorable when actual amounts exceed standards. Formula Variance VOH cost variance Actual VOH - (SC XAQ) = $3,800 - $ 2.00 1,700 ) = $ 400 U VOH efficiency variance (AQ - SQ)X SC =( 1,700 2,000 ) x $ 2.00 = $ 600 Now let's take a look at the fixed overhead cost and volume variances. Best will use a slightly different approach to analyze the fixed minchandanan Dammhne that fiunt meteen nat nantat in chenne in intent within the minunnt het then when an This question is complete. Move your cursor over or tap on the red arrows to see incorrect answers. All parts showing Close fic tic nda F from any list or enter any number in the input fields and then click Check Answer. S Clear All aining Check Answer MacBook Pro ial n emei and to co mall prod Help Me Solve This nere Question Help Premium, Inc, uses a standard cost system and provides the following information vith reag Click the icon to view the information.) lard Premium allocates manufacturing overhead to production based on standard direct labor hours. Premium reported the following actual results for 2018: actual number of units produced, 1,000; actual variable overhead, $3,800; actual fixed overhead, $3,500; actual direct labor hours, 1,800 ost v Read the requirements. fficiel Now let's take a look at the fixed overhead cost and volume variances. Best will use a slightly different approach to analyze the fixed overhead variances. Remember that fixed costs are not expected to change in total within the relevant range, but they do change per unit when there is a change in volume. To analyze fixed overhead costs, we will need three amounts: Actual fixed overhead costs incurred Budgeted fixed overhead costs Dati Allocated fixed overhead costs Begin by identifying the actual fixed overhead (FOH) costs incurred, the budgeted FOH costs, and the allocated FOH costs. Note that we are given the actual and budgeted FOH in the information given. We must calculate allocated fixed overhead costs by multiplying the standard fixed overhead allocation rate by the standard quantity of direct labor hours, which we previously determined to be 2,000 hours. Fixed Static Overhead Static Actual fixed overhead costs incurred $ 3,500 Budgeted fixed overhead costs $ 1,500 Standa Allocated fixed overhead costs $ 4,000 Now compute the fixed overhead cost and volume variances using the amounts you identified above. This question is complete. Move your cursor over or tap on the red arrows to see incorrect answers. All parts showing Close ad Static Static se from any list or enter any number in the input fields and then click Check Answer, arts emaining Clear All Check Answer MacBook Pro Help Me Solve This Question Help $ Premium, Inc. uses a standard cost system and provides the following information. (Click the icon to view the information.) Premium allocates manufacturing overhead to production based on standard direct labor hours. Premium reported the following actual results for 2018: actual number of units produced, 1,000; actual variable overhead, $3,800; actual fixed overhead, $3,500; actual direct labor hours, 1,800 Read the requirements Now compute the fixed overhead cost and volume variances using the amounts you identified above. Formula Variance FOH cost variance Actual FOH. Budgeted FOH = $ 3,500 $ 1.500 = 2,000 FOH volume variance Bugeted FOH - Allocated FOH = $1,500 $ 4,000 $ 2,500 F Requirement 2. Explain why the variances are favorable or unfavorable. Cost variances (VOH or FOH) are labeled as favorable if the company spent less and unfavorable if the company spent more. We compare budgeted costs to actual costs to find cost variances. Review each of the cost variances calculated in Requirement 1. Did Best actually spend more or less than budgeted? Efficiency variances (VOH) compare the actual use of resources used to allocate overhead to production (direct labor hours in our problem) to a standard amount based on actual production. Did Best use more hours to produce the 1,000 units than would be expected at two direct labor hours per unit? If so, then the efficiency variance is unfavorable. Volume variances (FOH) also compare the use of resources (direct labor in this problem) but they compare a standard amount to a budgeted amount. Review your calculation for this variance. Did Best's standard number of hours (actual number of units produced multiplied by a standard of two direct labor hours per unit) exceed the budgeted hours (static budget)? If so, then the company applied more fixed overhead than was budgeted and the volume variance is labeled as favorable. This question is complete. Move your cursor over or tap on the red arrows to see incorrect answers. All parts showing Close im any list or enter any number in the input fields and then click Check Answer. ng Clear All Check Answer MacBook Pro Premium Company uses a standard cost system and reports the following information for 2018 (Click the icon to view the information) Premium Company reported the following variances M Chick the icon to view the varios Premium produced 1,000 units of finished product in 2018 Read the requirements Begin by journalizing the purchase of direct materials on account, including the related arance Proper Date Accounts and Explanation Debit Credit Requirements Record the journal entries to record direct materials, direct labor, variable oved, and Gendaverhead, assuming al expenditures were on account and here were no beginning or ending balances in the inventory accounts al materials purchased were used in production, and at goods produced were sold). Record ne pourral entries to record the transfer to Finished Goods Inventory and Cost of Goods Sold fomt the journal entry for Sales Revenue) Adjust the Manufacturing Overhead account Record debit fest the credits Select the explanation on the Lastne of the jumal entry table) Data Table Print Done Data Table Standards 3 yards of cloth per unitat 51.10 per yard 2 direct labor hours per unit at $9.75 per hour Overhead allocated at $4.00 per direct labor hour Actual 2.400 yards of cloth were purchased at $1.15 per yard Employees worked 1400 hours and were paid $9.25 per hour Actual variable overhead was $2.200 Actual food overhead was $4.600 $ Drect materials cost variance Direct materials officiency variance Direct labor cost variance Direct labor efficiency variance Variatie overhead cost variance Variable overhead officiency variance Fired overhead coat variance Flad overhead volume variance 120 U 660 F 700 F 5.850 F 800 U 300F 900 U Print Done Choose from any stor enter any number in the periods and then click Check Answer 2.100 F 7 parts remaining Print Done Check Answer Help Me Solve This purch Question Help Premium Company uses a standard cost system and reports the Premium Company reported the following variances: following information for 2018: (Click the icon to view the variances.) (Click the icon to view the information.) Premium produced 1,000 units of finished product in 2018. Read the requirements Actual quantity of material used Standard cost Total cost at standard 2,700 * $ 1.00 2,700 Calculate the actual cost of the materials purchased. Actual quantity of material used * Actual cost = Total actual cost of materials 2,700 x $ 1.05 2,835 Now journalize the purchase of direct materials on account, including the related variance. Recall that Premium's direct materials cost variance was $135 unfavorable. An unfavorable variance means more expense has been incurred than planned and would have a debit balance. (Prepare a single compound journal entry) Date Accounts and Explanation Debit Credit Raw Materials Inventory 2,700 Direct Materials Cost Variance 135 Accounts Payable 2,835 Purchased direct materials. Record the use of direct materials, including the related variance. This question is complete. Move your cursor over or tap on the red arrows to see incorrect answers. All parts showing Close th per hours cate of cloth orked do ovo overhe enter any number in the input fields and then click Check Answer. Print Done MacBook information) Click the icon to view the variances.) Help Me Solve This Question Help DO Premium Company uses a standard cost system and reports the Premium Company reported the following variances: following information for 2018: (Click the icon to view the variances.) (Click the icon to view the information.) Premium produced 1,000 units of finished product in 2018. Read the requirements Record the use of direct materials, including the related variance. In the next transaction, Premium debits Work-in-Process Inventory for the standard cost of the standard quantity of direct materials that should have been used to make 1,000 units of the company's product in 2018. This maintains Work-in-Process Inventory at standard cost. Raw Materials Inventory is credited for the actual quantity of materials put into production (2,700 yards of cloth) at the standard cost (1.00 per yard). The difference will be the Direct Materials Efficiency. Variance Calculate the standard input quantities at standard costs now Standard quantity of direct materials * Standard cost Standard cost of direct materials 3,000 1.00 3,000 Record the use of direct materials now. Recall that Premium's Direct Materials Efficiency Variance was $300 favorable. A favorable variance has a credit balance and is a contra-expense. (Prepare a single compound journal entry.; } Accounts and explanation Debit Credit Work-in-Process Inventory Direct Materials Efficiency Variance Raw Materials Inventory 2.700 Used direct materials X $ Date tod 3,000 300 lott Ked ove erhe This question is complete. Move your cursor over or tap on the red arrows to see incorrect answers. All parts showing Close nter any number in the input fields and then click Check Answer. br, varie on ac ccounts ere sol entory the Ma expla Premium Company uses a standard cost system and reports the Premium Company reported the following variances: following information for 2018: (Click the icon to view the variances.) (Click the icon to view the information.) Premium produced 1,000 units of finished product in 2018. Read the requirements Record the incurrence of direct labor. In the next transaction, Work-in-Process Inventory is debited for the 10.25 per hour standard cost of the standard quantity of direct labor hours that should have been used to make 1,000 units of the company's product in 2018. This maintains Work-in-Process Inventory at standard cost. Wages Payable is credited for the actual cost the actual hours worked at the actual wage rate) because this is the amount Premium must pay the workers. Both the Direct Labor Cost Variance and the Direct Labor Efficiency Variance will also be adjusted for their respective amounts, which are given in the problem statement First calculate the standard quantities at standard costs. Standard quantity of direct labor hours * Standard cost Standard cost of labor 2,000 $ 10.25 = $ 20,500 Now, calculate the actual quantities at actual prices Actual quantity of labor used Actual cost Actual cost of labor 1,400 9.75 13,650 Journalize the incurrance and assignment of direct labor costs, including the related variances. Recall that Premium's Direct Labor Cost Variance was $700 favorable, and the Direct Labor Efficiency Variance was $6,150 favorable. (Prepare a single compound journal entry) Accounts and Explanation Debit Credit 1 Date Help Me Solve This Question Help or Ol bod ere eni the Premium Company uses a standard cost system and reports the Premium Company reported the following variances: following information for 2018: Click the icon to view the variances.) Click the icon to view the information.) Premium produced 1,000 units of finished product in 2018. Read the requirements. Journalize the incurrance and assignment of direct labor costs, including the related variances. Recall that Premium's Direct Labor Cost Variance was $700 favorable, and the Direct Labor Efficiency Variance was $6,150 favorable. (Prepare a single compound journal entry.) Date Accounts and explanation Debit Credit Work-in-Process Inventory 20,500 Direct Labor Cost Variance 700 Direct Labor Efficiency Variance 6,150 Wages Payable 13,650 Direct labor costs incurred. Record the actual overhead cost for 2018. I We have been told that Premium's actual variable overhead for 2018 was $1,800 and actual fixed overhead was $4,200. The sum of these two amounts is debited to the Manufacturing Overhead account and is credited to various other accounts, which may include Cash, Accounts Payable, Accumulated Depreciation, Prepaid Insurance, or other related overhead accounts. (In this scenario, we'll call the account "Various Accounts") Go ahead and journalize the entry to show the actual manufacturing overhead costs incurred. Accounts and explanation Debit Credit This question is complete. Move your cursor over or tap on the red arrows to see incorrect answers. All parts showing Close Date rany number in the input fields and then click Check Answer Print Done Che MacBook Pro Help Me Solve This Question Help Credit Premium Company uses a standard cost system and reports the Premium Company reported the following variances: following information for 2018: Click the icon to view the variances.) (Click the icon to view the information.) Premium produced 1,000 units of finished product in 2018. Read the requirements. Go ahead and journalize the entry to show the actual manufacturing overhead costs incurred. Date Accounts and Explanation Debit Manufacturing Overhead 6,000 Various Accounts 6,000 Manufacturing overhead costs incurred. Record the overhead allocated to Work-in-Process Inventory. Remember that overhead is applied to production using the standard overhead rate of 4.00 per direct labor hour multiplied by the standard quantity of direct labor hours, which we determined to be 2.000 hours in a previous step. When overhead is applied to inventory, the Work-in-Process inventory account is debited, and the Manufacturing Overhead account is credited. Date Accounts and explanation Debit Credit Work-in-Process Inventory 8,000 Manufacturing Overhead 8,000 Manufacturing overhead costs allocated. Journalize the movement of all production from Work-in-Process Inventory. of ars ec ott ed ve he da Inne Help Me Solve This Question Help or er en th BE Premium Company uses a standard cost system and reports the Premium Company reported the following variances: following information for 2018: (Click the icon to view the variances.) (Click the icon to view the information.) Premium produced 1,000 units of finished product in 2018. Read the requirements Once the production process is complete, all of the previously allocated standard costs are transferred from Work-in-Process Inventory to Finished Goods Inventory. Record the entry. Date Accounts and Explanation Debit Credit Finished Goods Inventory 31,500 Work-in-Process Inventory 31,500 Completed goods transferred. Record the entry to transfer the cost of sales at standard cost. Upon the sale of the items, Premium will transfer all of the standard costs from Finished Goods Inventory to Cost of Goods Sold. Record the entry. Accounts and Explanation Debit Credit Cost of Goods Sold 31,500 Finished Goods Inventory 31,500 Cost of sales at standard cost. Close the Manufacturing overhead account and record the overhead variances. This question is complete. Move your cursor over or tap on the red arrows to see incorrect answers. All parts showing Close Date ? Help Me Solve This Question Help or. or CCO ere ent the es Premium Company uses a standard cost system and reports the Premium Company reported the following variances: following information for 2018: Click the icon to view the variances.) (Click the icon to view the information.) Premium produced 1,000 units of finished product in 2018. Read the requirements Cost of sales at standard cost. Close the Manufacturing overhead account and record the overhead variances. Remember that we debited the Manufacturing Overhead account by the actual overhead costs incurred, $6,000, and credited it by the overhead costs applied to the inventory, $8,000. The difference is due to the variable and fixed overhead variances. To close out the Manufacturing Overhead account, we must record these variances, debiting the Manufacturing Overhead account for the difference. The debit to Manufacturing Overhead indicates that the actual overhead costs debited to the account were less than the allocated amounts credited to the account and overhead was overallocated. Remember that the unfavorable variable overhead and fixed overhead cost variances will be recorded with debits and the favorable variable overhead officiency and fixed overhead volume variances will be recorded with credits. (Prepare a single compound journal entry) Date Accounts and explanation Debit Credit Manufacturing Overhead 2,000 Variable Overhead Cost Variance 1,200 Fixed Overhead Cost Variance Variable Overhead Efficiency Variance 1,200 Fixed Overhead Volume Variance 2,200 To adjust Manufacturing Overhead. 200 This question is complete. 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