Overhead Application, Fixed and Variable Overhead Variances Zepol Company is planning to produce 600,000 power drills for the coming year. The company uses direct labor hours to assign overhead to products. Each drill requires 0.75 standard hour of labor for completion. The total budgeted overhead was $1,777,500. The total fixed overhead budgeted for the coming year is $832,500. Predetermined overhead rates are calculated using expected production, measured in direct labor hours. Actual results for the year are: Actual production (units)   594,000   Actual variable overhead $928,000   Actual direct labor hours (AH)   446,000   Actual fixed overhead $835,600

FIXED FACTORY OVERHEAD VARIANCES AND JOURNAL ENTRIES (YOU MUST SHOW YOUR CALCULATIONS – NO CALCULATIONS, NO CREDIT).   Company’s fixed factory overhead is budgeted at $300,000 for the year on an expected annual production level of 5,000 units.  Each unit of finished product requires three (3) standard direct labor hours. Actual production in units:                                           4,950 units Actual direct labor hours worked                              15,100 hours Actual fixed factory overhead costs incurred:       $298,000     PREPARE JOURNAL ENTRY TO RECOGNIZE THE VARIANCES:

Factory Overhead Cost Variance Report Tannin Products Inc. prepared the following factory overhead cost budget for the Trim Department for July of the current year, during which it expected to use 14,000 hours for production: Variable overhead costs:     Indirect factory labor $44,800   Power and light 10,780   Indirect materials 21,000      Total variable overhead cost   $76,580 Fixed overhead costs:     Supervisory salaries $61,560   Depreciation of plant and equipment 16,200   Insurance and property taxes 30,240      Total fixed overhead cost   108,000 Total factory overhead cost   $184,580 Tannin has available 18,000 hours of monthly productive capacity in the Trim Department under normal business conditions. During July, the Trim Department actually used 13,000 hours for production. The actual fixed costs were as budgeted. The actual variable overhead for July was as follows: Actual variable factory overhead costs:   Indirect factory labor $40,560…

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