The Platter Valley factory of Bybee Industries manufactures field boots. The cost of each boot includes direct materials, direct labor, and manufacturing (factory) overhead. The firm traces all direct costs to products, and it assigns overhead cost to products based on direct labor hours. The company budgeted $9,600 variable factory overhead cost, $92,000 for fixed factory overhead cost and 2,000 direct labor hours (its practical capacity) to manufacture 4,000 pairs of boots in March. The factory used 3,700 direct labor hours in March to manufacture 3,800 pairs of boots and spent $16,800 on variable overhead during the month. The actual fixed overhead cost incurred for the month was $95,000. Required: 1. Compute the variable overhead spending (rate) variance, the variable overhead efficiency variance, and the total variable overhead variance for March and state whether each variance is favorable (F) or unfavorable (U). 2. Provide the appropriate journal entry to record the variable overhead spending (rate) variance and a second entry to record the variable overhead efficiency variance for March. Assume that the company uses a single account, Factory Overhead, to record overhead costs.

The Platter Valley factory of Bybee Industries manufactures field boots. The cost of each boot includes direct materials, direct labor, and manufacturing (factory) overhead. The firm traces all direct costs to products, and it assigns overhead cost to products based on direct labor hours. The company budgeted $9,600 variable factory overhead cost, $92,000 for fixed factory overhead cost and 2,000 direct labor hours (its practical capacity) to manufacture 4,000 pairs of boots in March. The factory used 3,700 direct labor hours in March to manufacture 3,800 pairs of boots and spent $16,800 on variable overhead during the month. The actual fixed overhead cost incurred for the month was $95,000. Required: 1. Compute the variable overhead spending (rate) variance, the variable overhead efficiency variance, and the total variable overhead variance for March and state whether each variance is favorable (F) or unfavorable (U). 2. Provide the appropriate journal entry to record the variable overhead spending (rate) variance and a second entry to record the variable overhead efficiency variance for March. Assume that the company uses a single account, Factory Overhead, to record overhead costs.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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