Question
The Jones Corporation uses standard costing in its manufacturing plant for auto parts. The standard cost of a particular auto part, based on a denominator
The Jones Corporation 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 $ 15 per hour. Actual output produced was 4,100 units. Variable manufacturing overhead incurred was $235,000. Fixed manufacturing overhead incurred was $385,000. Actual machine-hours were 27,500.
1. | Prepare an analysis of all variable manufacturing overhead and fixed manufacturing overhead variances, using the 4-variance analysis. |
2. | Prepare journal entries using the 4-variance analysis. |
3. | Describe how individual fixed manufacturing overhead items are controlled from day to day. |
4. | Discuss possible causes of the fixed manufacturing overhead variances. |
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