3. Factory overhead variance analysis and journal entries. The theoretical capacity of Lawrence Products is 3,600 units or 9.000 direct labor hours. At the normal capacity level (80% of theoretical), the following factory overhead amounts have been budgeted: Fixed.... Variable $4,392 5,904 .... Standards were set as follows: Direct labor, 2.5 hours per unit Factory overhead, $1.43 per direct labor hour Actual data for May were: Production, 2,870 units Labor, 7,150 hours Factory overhead, $10,236 Required: (1) Compute the variances resulting when the two-, three-, and four-variance methe are used. l footonu overh

3. Factory overhead variance analysis and journal entries. The theoretical capacity of Lawrence Products is 3,600 units or 9.000 direct labor hours. At the normal capacity level (80% of theoretical), the following factory overhead amounts have been budgeted: Fixed.... Variable $4,392 5,904 .... Standards were set as follows: Direct labor, 2.5 hours per unit Factory overhead, $1.43 per direct labor hour Actual data for May were: Production, 2,870 units Labor, 7,150 hours Factory overhead, $10,236 Required: (1) Compute the variances resulting when the two-, three-, and four-variance methe are used. l footonu overh

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Description: 3. Factory overhead variance analysis and journal entries. The theoretical capacity ofLawrence Products is 3,600 units or 9.000 direct labor hours. At the normal capacity level(80% of theoretical), the following factory overhead amounts have been bu

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Chapter1: Financial Statements And Business Decisions

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Concept explainers

Variance Analysis

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 variance so that the necessary steps should be taken to correct that variance.

Standard Costing

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 the various expenses.

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Question

3. Factory overhead variance analysis and journal entries. The theoretical capacity of
Lawrence Products is 3,600 units or 9.000 direct labor hours. At the normal capacity level
(80% of theoretical), the following factory overhead amounts have been budgeted:
Fixed....
Variable
$4,392
5,904
....
Standards were set as follows:
Direct labor, 2.5 hours per unit
Factory overhead, $1.43 per direct labor hour
Actual data for May were:
Production, 2,870 units
Labor, 7,150 hours
Factory overhead, $10,236
Required:
(1) Compute the variances resulting when the two-, three-, and four-variance methc
are used.
(2) For each method, prepare the journal entries to record actual factory overhe
applied factory overhead, and variances.

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