Concept explainers
Concept introduction:
Fixed Overhead Spending/
The Fixed Overhead budget variance is the difference between the actual fixed overhead cost and budgeted fixed overhead cost. The formula to calculate the Fixed Overhead budget Variance is as follows:
Fixed Overhead Volume variance:
The Fixed Overhead Volume variance is the difference between the allocated fixed overhead cost and the budgeted fixed overhead cost the formula to calculate the Fixed Overhead volume Variance is as follows:
Note: The allocated fixed overhead is calculated with the help of following formula:
To indicate:
The Journal entry for Fixed Overhead Cost and related variances.
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MANAGERIAL ACCOUNTING W/CONNECT
- Rath Company showed the following information for the year: Required: 1. Calculate the standard direct labor hours for actual production. 2. Calculate the applied variable overhead. 3. Calculate the total variable overhead variance.arrow_forwardWarner Company has the following data for the past year: Warner uses the overhead control account to accumulate both actual and applied overhead. Required: 1. Calculate the overhead variance for the year and close it to cost of goods sold. 2. Assume the variance calculated is material. After prorating, close the variances to the appropriate accounts and provide the final ending balances of these accounts. 3. What if the variance is of the opposite sign calculated in Requirement 1? Provide the appropriate adjusting journal entries for Requirements 1 and 2.arrow_forwardMulliner Company showed the following information for the year: Required: 1. Calculate the standard direct labor hours for actual production. 2. Calculate the applied variable overhead. 3. Calculate the total variable overhead variance.arrow_forward
- Required:1. Compute the plantwide predetermined overhead rate and calculate the overhead assigned toeach product.2. Calculate the predetermined departmental overhead rates and calculate the overheadassigned to each product.3. Using departmental rates, compute the applied overhead for the year. What is the under- oroverapplied overhead for the firm?4. Prepare the journal entry that disposes of the overhead variance calculated in Requirement3, assuming it is not material in amount. What additional information would you need ifthe variance is material to make the appropriate journal entry?arrow_forwardRequired:(a) Compute Elite’s predetermined manufacturing overhead rate for 2020. (b) Calculate the total manufacturing costs for each job. (c) Using the total figures, record the above transactions in the general journal. (d) Post the manufacturing overhead transactions to the Manufacturing Overhead T-account, clearlyshowing the balance before closing the account. State the journal entries necessary to dispose ofthe variance. Assume that the manufacturing overhead variance is immaterial. (e) What is the balance in the Cost of Goods Sold account after the adjustment? (f) Compute Elite’s gross profit earned on the jobs sold, after adjusting for the manufacturing overheadvariance (g) Post the appropriate entries to Work in Process Inventory account & determine the account balanceon March 31, the end of the quarter.arrow_forwardQuestion 2a) Refer to the information in Question 1 for data. Now, assume that Juju has decided to use a plantwide overhead rate based on the direct labor hours.Required:i) Calculate the predetermined plantwide overhead rate. (Note: Round to the nearest cent.)ii) Calculate the overhead applied to production for the month of Jun.iii) Calculate the overhead variance for the month of Junarrow_forward
- i) Calculate the predetermined plantwide overhead rate. (Note: Round to the nearest cent.) ii) Calculate the overhead applied to production for the month of Jun. iii) Calculate the overhead variance for the month of Jun.arrow_forwardRequired:(a) Compute Elite’s predetermined manufacturing overhead rate for 2020.(b) Calculate the total manufacturing costs for each job. (c) Using the total figures, record the above transactions in the general journal. (d) Post the manufacturing overhead transactions to the Manufacturing Overhead T-account, clearly showing the balance before closing the account. State the journal entries necessary to dispose of the variance. Assume that the manufacturing overhead variance is immaterial. (e) What is the balance in the Cost of Goods Sold account after the adjustment? (f) Compute Elite’s gross profit earned on the jobs sold, after adjusting for the manufacturing overhead variance (g) Post the appropriate entries to Work in Process Inventory account & determine the account balance on March 31, the end of the quarter.arrow_forward(a) Compute KRAFT ‘R’ US’ predetermined manufacturing overhead rate for 20X8. (b) State the journal entries necessary to record the above transactions in the general journal. Assume that KRAFT ‘R’ US uses the perpetual inventory system. (c) Post the manufacturing overhead transactions to the Manufacturing Overhead T-account and state the balance on the account before performing end of period closing entries. Show the journal entriesnecessary to dispose of the variance. (d)What is the balance in the Cost of Goods Sold account after the adjustment? (e) Compute KRAFT ‘R’ US’gross profit earned on the jobs completed. (f) Open T-accounts for Materials Inventory, Work in Process Inventory and Finished Goods Inventory. Post the appropriate entries to these accounts & determine the ending account balances.arrow_forward
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