Laughlin, Inc., uses a standard costing system. The predetermined overhead rates are calculated using practical capacity. Practical
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Required:
1. Calculate the fixed overhead spending and volume variances. Explain the meaning of the volume variance to the manager of Laughlin.
2. Calculate the variable overhead spending and efficiency variances. Is the spending variance the same as the direct materials price variance? If not, explain how it differs.
3. Prepare the journal entries that reflect the following:
a. Assignment of overhead to production
b. Recognition of the incurrence of actual overhead
c. Recognition of overhead variances
d. Closing out overhead variances, assuming they are not material
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Related Book For
Cornerstones of Cost Management
ISBN: 978-1285751788
3rd edition
Authors: Don R. Hansen, Maryanne M. Mowen
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