Patel and Sons Inc. uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 51,000 machine hours per year, which represents 25,500 units of output. Annual budgeted fixed factory overhead costs are $255,000 and the budgeted variable factory overhead cost rate is $2.30 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 18,800 units, which took 40,000 machine hours. Actual fixed factory overhead costs for the year amounted to $249,400 while the actual variable overhead cost per unit was $2.20. Based on the information provided above, prepare the appropriate journal entries to record: (a) actual factory overhead costs for the year, (b) the applied factory overhead costs for the year (both variable and fixed), and (c) the total flexible-budget variance and the production volume variance for the period. Assume that the company uses a single account, Factory Overhead, to record both actual and applied factory overhead. Also, assume that the only variable overhead cost was electricity and that actual fixed overhead consisted of depreciation of $154,000 and supervisory salaries of $95,400 Finally, assume that both electricity expense and the supervisory salaries expense have been incurred but not yet paid (Le, both are current liabilities). (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 2 3 Record the actual overhead costs. Note: Enter debits before credits. Debit Credit Transaction General Journal
Patel and Sons Inc. uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 51,000 machine hours per year, which represents 25,500 units of output. Annual budgeted fixed factory overhead costs are $255,000 and the budgeted variable factory overhead cost rate is $2.30 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 18,800 units, which took 40,000 machine hours. Actual fixed factory overhead costs for the year amounted to $249,400 while the actual variable overhead cost per unit was $2.20. Based on the information provided above, prepare the appropriate journal entries to record: (a) actual factory overhead costs for the year, (b) the applied factory overhead costs for the year (both variable and fixed), and (c) the total flexible-budget variance and the production volume variance for the period. Assume that the company uses a single account, Factory Overhead, to record both actual and applied factory overhead. Also, assume that the only variable overhead cost was electricity and that actual fixed overhead consisted of depreciation of $154,000 and supervisory salaries of $95,400 Finally, assume that both electricity expense and the supervisory salaries expense have been incurred but not yet paid (Le, both are current liabilities). (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 2 3 Record the actual overhead costs. Note: Enter debits before credits. Debit Credit Transaction General Journal
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:Patel and Sons Inc. uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for
the plant is defined as 51,000 machine hours per year, which represents 25,500 units of output. Annual budgeted fixed
factory overhead costs are $255,000 and the budgeted variable factory overhead cost rate is $2.30 per unit. Factory
overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual
output for the year was 18,800 units, which took 40,000 machine hours. Actual fixed factory overhead costs for the year
amounted to $249,400 while the actual variable overhead cost per unit was $2.20.
Based on the information provided above, prepare the appropriate journal entries to record: (a) actual factory overhead costs for the
year, (b) the applied factory overhead costs for the year (both variable and fixed), and (c) the total flexible-budget variance and the
production volume variance for the period. Assume that the company uses a single account, Factory Overhead, to record both actual
and applied factory overhead. Also, assume that the only variable overhead cost was electricity and that actual fixed overhead
consisted of depreciation of $154,000 and supervisory salaries of $95,400 Finally, assume that both electricity expense and the
supervisory salaries expense have been incurred but not yet paid (Le, both are current liabilities). (Do not round intermediate
calculations. Round your final answers to nearest whole dollar amount. If no entry is required for a transaction/event, select "No
journal entry required" in the first account field.)
View transaction list
Journal entry worksheet
2
3
Record the actual overhead costs.
Note: Enter debits before credits.
Debit
Credit
Transaction
General Journal
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