The practical capacity of Hector Manufacturing Company is 5,000 units of product Dupto. At the normal capacity level (80% of practical), the following factory overhead amounts have been budgeted:
Fixed $18,000
Variable 6,000
Standards we set as follows:
Processing time, 1.5 hours per unit of Dupto
Factory overhead, $4 per hour of processing
Actual data for November were:
Production, 3,450 units of Dupto
Processing time, 5,320 hours
Factory overhead, $20,400
Required:
Assuming actual and applied overhead are recorded in separate accounts, give a journal entry to apply overhead to production, and another to close the two overhead accounts and record overhead variances. Use the alternative three-variance method.