Question

Vancouver Scholastic Supply Company uses a standard-costing system. The firm estimates that it will operate its manufacturing facilities at 600,000 machine hours for the year. The estimate for total budgeted overhead is $1,500,000. The standard variable-overhead rate is estimated to be $2 per machine hour or $6 per unit. The actual data for the year are presented below.
Actual finished units..................................................... 187,500
Actual machine hours................................................... 573,000
Actual variable overhead............................................. $1,275,750
Actual fixed overhead................................................. $ 294,000

Required:
1. Compute the following variances. Indicate whether each is favorable or unfavorable, where appropriate.
a. Variable-overhead spending variance.
b. Variable-overhead efficiency variance.
c. Fixed-overhead budget variance.
d. Fixed-overhead volume variance.
2. Prepare journal entries to:
a. Record the incurrence of actual variable overhead and actual fixed overhead.
b. Add variable and fixed overhead to Work-In-Process Inventory.
c. Close underapplied or overapplied overhead into Cost of Goods Sold.
(CMA, adapted)




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  • CreatedApril 22, 2014
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