3. The practical capacity for a year is defined as 20,000 units requiring 25,000 direct labor hours. The total budgeted overhead cost is $170,000, of which the budgeted variable overhead cost is $95,000. The standard direct labor cost is $3 per direct labor hour. The labor efficiency variance is $2,625 favorable. The actual units produced are 18,500 units. The actual fixed overhead cost was $74,000. The actual variable overhead cost was $100,000. Required: (1) Compute the variable overhead spending and efficiency variances. (2) Compute the fixed overhead spending and volume variances. (3) Prepare all the relevant journal entries (including the closing entry).
3. The practical capacity for a year is defined as 20,000 units requiring 25,000 direct labor hours. The total budgeted overhead cost is $170,000, of which the budgeted variable overhead cost is $95,000. The standard direct labor cost is $3 per direct labor hour. The labor efficiency variance is $2,625 favorable. The actual units produced are 18,500 units. The actual fixed overhead cost was $74,000. The actual variable overhead cost was $100,000. Required: (1) Compute the variable overhead spending and efficiency variances. (2) Compute the fixed overhead spending and volume variances. (3) Prepare all the relevant journal entries (including the closing entry).
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter10: Standard Costing And Variance Analysis
Section: Chapter Questions
Problem 58E: At the beginning of the year, Lopez Company had the following standard cost sheet for one of its...
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Transcribed Image Text:3. The practical capacity for a year is defined as 20,000 units requiring 25,000 direct labor hours.
The total budgeted overhead cost is $170,000, of which the budgeted variable overhead cost is
$95,000. The standard direct labor cost is $3 per direct labor hour. The labor efficiency
variance is $2,625 favorable. The actual units produced are 18,500 units. The actual fixed
overhead cost was $74,000. The actual variable overhead cost was $100,000.
Required:
(1) Compute the variable overhead spending and efficiency variances.
(2) Compute the fixed overhead spending and volume variances.
(3) Prepare all the relevant journal entries (including the closing entry).
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