Cost of goods sold Required: 1. Determine for the period the following items: a. Flexible budget for variable factory overhead cost based on output for the period. b. Total variable overhead cost applied to production during the period. c. Total budgeted fixed factory overhead cost. d. Total fixed factory overhead cost applied to production during the period. 25,0 2. Compute the following factory overhead cost variances using a four-variance analysis: a. Total variable overhead cost variance. b. Variable overhead spending variance. c. Variable overhead efficiency variance. d. Total underapplied or overapplied variable overhead. e. Fixed overhead spending variance. f. Fixed overhead production volume variance. g. Total fixed overhead cost variance. h. Total underapplied or overapplied fixed overhead. 3. Compute the following factory overhead cost variances using three-varlance analysis: a. Overhead spending variance. b. Overhead efficiency variance. c. Fixed overhead production volume variance. 4. Compute the total overhead flexible-budget variance and the fixed overhead production volume variance using a two-varia analysis. 5. Using a single overhead account (e.g., Factory Overhead), make proper journal entries for: a. Incurrence of factory overhead costs. b. Application of factory overhead costs to production. c. Identification of overhead variances assuming that the firm uses the four-variance analysis identified in requirement 2. d. Close all factory overhead cost items and their variances of the period if: (1) The firm closes all variances to the Cost of Goods Sold account. (2) The firm prorates variances to the inventory accounts and the Cost of Goods Sold account
Cost of goods sold Required: 1. Determine for the period the following items: a. Flexible budget for variable factory overhead cost based on output for the period. b. Total variable overhead cost applied to production during the period. c. Total budgeted fixed factory overhead cost. d. Total fixed factory overhead cost applied to production during the period. 25,0 2. Compute the following factory overhead cost variances using a four-variance analysis: a. Total variable overhead cost variance. b. Variable overhead spending variance. c. Variable overhead efficiency variance. d. Total underapplied or overapplied variable overhead. e. Fixed overhead spending variance. f. Fixed overhead production volume variance. g. Total fixed overhead cost variance. h. Total underapplied or overapplied fixed overhead. 3. Compute the following factory overhead cost variances using three-varlance analysis: a. Overhead spending variance. b. Overhead efficiency variance. c. Fixed overhead production volume variance. 4. Compute the total overhead flexible-budget variance and the fixed overhead production volume variance using a two-varia analysis. 5. Using a single overhead account (e.g., Factory Overhead), make proper journal entries for: a. Incurrence of factory overhead costs. b. Application of factory overhead costs to production. c. Identification of overhead variances assuming that the firm uses the four-variance analysis identified in requirement 2. d. Close all factory overhead cost items and their variances of the period if: (1) The firm closes all variances to the Cost of Goods Sold account. (2) The firm prorates variances to the inventory accounts and the Cost of Goods Sold account
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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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Transcribed Image Text:@
2
Simpson Manufacturing has the following standard cost sheet for one of its products:
Direct materials
Direct labor
Variable factory overhead
Fixed factory overhend
Cost per unit
Account
Work-in-process inventory
Finished goods inventory
Cost of goods sold
The company uses a standard cost system and applies factory overhead cost based on direct labor hours and determines the factory
overhead rate based on a practical capacity of 400 units of the product.
Simpson has the following actual operating results for the year just completed:
Units manufactured
Direct materials purchased and used
Direct labor incurred
Variable factory overhead incurred
Fixed factory overhead incurred
Before closing the periodic accounts, the (standard cost) entries in selected accounts follow:
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F2
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20
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F3
5 pounds at $2 per pound
2 hours at $25 per hour
2 hours at $5 per hour
2 hours at $20 per hour
Required:
1. Determine for the period the following items:
a. Flexible budget for variable factory overhead cost based on output for the period.
b. Total variable overhead cost applied to production during the period.
c. Total budgeted fixed factory overhead cost.
d. Total fixed factory overhead cost applied to production during the period.
2. Compute the following factory overhead cost variances using a four-variance analysis:
a. Total variable overhead cost variance.
b. Variable overhead spending variance.
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$ 195,000
148,640
125,690
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890 hours
Total
$ 10
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50
10
40
$ 110
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24,030
5,696
15,800
Credit
(total)
$ 148,640
125,690
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Transcribed Image Text:Finished goods inve
Cost of goods sold
Required:
1. Determine for the period the following items:
a. Flexible budget for variable factory overhead cost based on output for the period.
b. Total variable overhead cost applied to production during the period.
c. Total budgeted fixed factory overhead cost.
d. Total fixed factory overhead cost applied to production during the period.
2. Compute the following factory overhead cost variances using a four-variance analysis:
a. Total variable overhead cost variance.
b. Variable overhead spending variance.
c. Variable overhead efficiency variance.
d. Total underapplied or overapplied variable overhead.
e. Fixed overhead spending variance.
f. Fixed overhead production volume variance.
g. Total fixed overhead cost variance.
h. Total underapplied or overapplied fixed overhead.
3. Compute the following factory overhead cost variances using three-variance analysis:
a. Overhead spending variance.
b. Overhead efficiency variance.
c. Fixed overhead production volume variance.
4. Compute the total overhead flexible-budget variance and the fixed overhead production volume variance using a two-varianc
analysis.
5. Using a single overhead account (e.g., Factory Overhead), make proper journal entries for:
a. Incurrence of factory overhead costs.
b. Application of factory overhead costs to production.
c. Identification of overhead variances assuming that the firm uses the four-variance analysis identified in requirement 2.
d. Close all factory overhead cost items and their variances of the period if:
(1) The firm closes all variances to the Cost of Goods Sold account.
(2) The firm prorates variances to the inventory accounts and the Cost of Goods Sold account.
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Complete this question by entering your answers in the tabs below.
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