A company uses machine hours (MHs) to assign both variable and fixed factory overhead costs to products. Supporting data for the month: Budget Actual $ $ 16,000 6,000 13,000 18,500 8,500 13,000 Fixed overhead cost for the month: Engineering support (salaries) Factory insurance Property taxes (factory) Equipment depreciation (factory) Supervisory salaries (factory) Set-up labor Materials-handling labor Total 14,800 14,800 15,800 3,400 3,500 15,800 5,200 5,400 $ 72,500 $ 81,200 $ $ 6.00 1.00 3.00 6.50 1.00 3.00 Variable overhead costs per MH: Electricity Indirect material A Indirect material B Indirect labor: Maintenance Manufacturing supplies Total 5.00 5.00 1.00 1.10 $ 16.00 $ 16.60 Budgeted machine hours Standard allowed MH for units produced Actual MH worked during the month 7,250 6,500 6,600 The company uses a single overhead account, Factory Overhead, and performs a two-way analysis of the total factory overhead cost Required: 1. To perform the two-way variance analysis, calculate the (a) total factory overhead cost variance, (b) total flexible-budget variance, and (c) the production volume variance for the month. State whether each variance is favorable (F) or unfavorable (U). 2. Provide journal entries to record each of the following separately: (a) actual variable overhead costs, (b) actual fixed overhead costs, and (c) standard variable overhead cost applied to production, and (d) standard fixed overhead cost applied to production. Note: Accrued payroll costs are recorded in Salaries and Wages Payable, while transactions regarding indirect materials and manufacturing supplies are recorded in the Indirect Materials Inventory account. 3. Provide a single journal entry to record the two variances in Requirement 1 (i.e. total flexible-budget variance and the production volume variance). 4. Provide a single journal entry to close these two variances to the Cost of Goods Sold (COGS) account, assuming that the variances calculated above represent net overhead cost variances for the year. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req 3 and 4 To perform the two-way variance analysis, calculate the (a) total factory overhead cost variance, (b) total flexible-budget variance, and (c) the production volume variance for the month. State whether each variance is favorable (F) or unfavorable (U). a. Total factory overhead cost variance b. Total flexible-budget variance c. Production volume variance A company uses machine hours (MHs) to assign both variable and fixed factory overhead costs to products. Supporting data for the month: Budget Actual $ $ 16,000 6,000 13,000 18,500 8,500 13,000 Fixed overhead cost for the month: Engineering support (salaries) Factory insurance Property taxes (factory) Equipment depreciation (factory) Supervisory salaries (factory) Set-up labor Materials-handling labor Total 14,800 14,800 15,800 3,400 3,500 15,800 5,200 5,400 $ 72,500 $ 81,200 $ $ 6.00 1.00 3.00 6.50 1.00 3.00 Variable overhead costs per MH: Electricity Indirect material A Indirect material B Indirect labor: Maintenance Manufacturing supplies Total 5.00 5.00 1.00 1.10 $ 16.00 $ 16.60 Budgeted machine hours Standard allowed MH for units produced Actual MH worked during the month 7,250 6,500 6,600 The company uses a single overhead account, Factory Overhead, and performs a two-way analysis of the total factory overhead cost Required: 1. To perform the two-way variance analysis, calculate the (a) total factory overhead cost variance, (b) total flexible-budget variance, and (c) the production volume variance for the month. State whether each variance is favorable (F) or unfavorable (U). 2. Provide journal entries to record each of the following separately: (a) actual variable overhead costs, (b) actual fixed overhead costs, and (c) standard variable overhead cost applied to production, and (d) standard fixed overhead cost applied to production. Note: Accrued payroll costs are recorded in Salaries and Wages Payable, while transactions regarding indirect materials and manufacturing supplies are recorded in the Indirect Materials Inventory account. 3. Provide a single journal entry to record the two variances in Requirement 1 (i.e. total flexible-budget variance and the production volume variance). 4. Provide a single journal entry to close these two variances to the Cost of Goods Sold (COGS) account, assuming that the variances calculated above represent net overhead cost variances for the year. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req 3 and 4 To perform the two-way variance analysis, calculate the (a) total factory overhead cost variance, (b) total flexible-budget variance, and (c) the production volume variance for the month. State whether each variance is favorable (F) or unfavorable (U). a. Total factory overhead cost variance b. Total flexible-budget variance c. Production volume variance
