Four OH variances; journal entries Kemp Manufacturing set 210,000 direct labor hours as the annual capacity measure for computing its predetermined variable overhead rate. At that level, budgeted variable overhead costs are $945,000. Kemp will apply budgeted fixed overhead of $421,200 on the basis of 11,700 budgeted machine hours for the year. Both machine hours and fixed overhead costs are expected to be incurred evenly each month. During March, Kemp incurred 17,700 direct labor hours and 900 machine hours. Actual variable and fixed overhead were $78,975 and $34,200, respectively. The standard time: allowed for March production were 17,940 direct labor hours and 870 machine hours. a. Using the four-variance approach, determine the overhead variances for March. Note: Do not use negative signs with your answers. VOH Spending Variance Actual VOH - Budgeted VOH = VOH Spending Variance 0-$ 0 = $ $ 0 VOH Efficiency Variance Budgeted VOH - Applied VOH $ 0 VOH Efficiency Variance FOH Spending Variance Actual FOH - Budgeted FOH = FOH Spending Variance $ 0 0 = 0 FOH Volume Variance Budgeted FOH- Applied FOH = FOH Volume Variance $ 0-$ 0 = $ 0

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for …

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on t…