Wildhorse was closing up shop for the season and the fiscal year-end, as well. Managers had carefully evaluated the company's performance, comparing the actual results to budget. They even dug a little deeper into the flexible budget variances to determine the respective price and efficiency (of volume) variances. The following shows the framework used to determine these variances-although you'll notice that they neglected to label the differences.

	Actual Cost	Unnamed Column	Flexible Budget
DM	$66,850	$67,450	$66,200
DL	$87,450	$84,700	$82,750
Variable-MOH	$40,000	$41,500	$43,600

	Actual Cost	Master Budget	Applied Fixed-MOH
Fixed-MOH	$52,100	$50,200	$51,200

(a) For each resource, calculate and label the differences between actual cost and the unnamed middle comparison point, as well as the difference between the unnamed middle comparison point and the flexible budget. Be sure to specify the name, amount, and sign of these variances.

	DM	DL	Variable-MOH
Price Variance	$600	Favorable	$2,50	Unfavorable	$1,500	Favorable
Efficiency Variance	$1,250	Unfavorable	$1,950	Unfavorable	$2,100	Favorable

	Fixed-MOH
Price Variance	$1,700	Unfavorable
Volume Variance	$1,700	Favorable

(b) Record the journal entry to write off these variances directly to COGS this Period.

Account Titles and Explanation	Debit	Credit
COGS	$1750
DM Price Variance	$600
Fixed-MOH Volume Variance	$1700
Variable-MOH Price Variance	$1500
Variable-MOH Efficiency Variance	$2100
DL Efficiency Variance		$1900
DL Price Variance		$2750
Fixed-MOH Price Variance		$1700
DM Price Variance		$1250

(c) What is the effect of your journal entry from part (b) on COGS? If the balance in COGS immediately prior to this entry was $216,000, what is its new adjusted balance?

The effect on COGS is to it by $ .

New adjusted balance $

Answer rating: 100% (QA)

In part b the journal entry directly writes off the variances to Cost of Goods Sold COGS Lets summar... View the full answer