FIXED FACTORY OVERHEAD VARIANCES AND JOURNAL ENTRIES (YOU MUST SHOW YOUR CALCULATIONS – NO CALCULATIONS, NO CREDIT). Company’s fixed factory overhead is budgeted at $300,000 for the year on an expected annual production level of 5,000 units. Each unit of finished product requires three (3) standard direct labor hours. Actual production in units: 4,950 units Actual direct labor hours worked 15,100 hours Actual fixed factory overhead costs incurred: $298,000 PREPARE JOURNAL ENTRY TO RECOGNIZE THE VARIANCES:
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.
FIXED FACTORY
Company’s fixed factory overhead is budgeted at $300,000 for the year on an expected annual production level of 5,000 units. Each unit of finished product requires three (3) standard direct labor hours.
Actual production in units: 4,950 units
Actual direct labor hours worked 15,100 hours
Actual fixed
- PREPARE
JOURNAL ENTRY TO RECOGNIZE THE VARIANCES:
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