a. Using the four-variance approach, determine the overhead variances for March.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
Only Solve journal entries
Transcribed Image Text: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 times
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
VOH Efficiency Variance
Budgeted VOH - Applied VOH = VOH Efficiency Variance
0-$
0 = $
0
$
0
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
Transcribed Image Text:b. Prepare all journal entries related to overhead for Kemp Manufacturing for March.
Note: Record any multiple debits or any multiple credits in alphabetical order by account name.
Debit
Account
To record actual overhead cost for March
To apply overhead to work in process for March
To record variable overhead variances for March
To record fixed overhead variances for March
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