Overhead Variances, Four-Variance Analysis, Journal Entries Janson, Inc., uses a standard costing system. The predetermined overhead rates are calculated using practical capacity. Practical capacity for a year is defined as 100,000 units requiring 20,000 standard direct labor hours. Budgeted overhead for the year is $76,000, of which $30,000 is fixed overhead. During the year, 96,000 units were produced using 19,000 direct labor hours. Actual annual overhead costs totaled $80,000, of which $29,600 is fixed overhead. Required: 1. Calculate the fixed overhead spending and volume variances. Fixed Overhead Spending Variance Fixed Overhead Volume Variance 2. Calculate the variable overhead spending and efficiency variances. Variable Overhead Spending Variance Variable Overhead Efficiency Variance 3. Prepare the journal entries that reflect the following: a. Assignment of overhead to production b. Recognition of the incurrence of actual overhead c. Recognition of overhead variances d. Closing out overhead variances, assuming they are not material Note: Close the variances with a debit balance first. For compound entries, if an amount box does not require an entry, leave it blank. 0000000⁰0000
Overhead Variances, Four-Variance Analysis, Journal Entries Janson, Inc., uses a standard costing system. The predetermined overhead rates are calculated using practical capacity. Practical capacity for a year is defined as 100,000 units requiring 20,000 standard direct labor hours. Budgeted overhead for the year is $76,000, of which $30,000 is fixed overhead. During the year, 96,000 units were produced using 19,000 direct labor hours. Actual annual overhead costs totaled $80,000, of which $29,600 is fixed overhead. Required: 1. Calculate the fixed overhead spending and volume variances. Fixed Overhead Spending Variance Fixed Overhead Volume Variance 2. Calculate the variable overhead spending and efficiency variances. Variable Overhead Spending Variance Variable Overhead Efficiency Variance 3. Prepare the journal entries that reflect the following: a. Assignment of overhead to production b. Recognition of the incurrence of actual overhead c. Recognition of overhead variances d. Closing out overhead variances, assuming they are not material Note: Close the variances with a debit balance first. For compound entries, if an amount box does not require an entry, leave it blank. 0000000⁰0000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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Transcribed Image Text:Overhead Variances, Four-Variance Analysis, Journal Entries
Janson, Inc., uses a standard costing system. The predetermined overhead rates are calculated using practical capacity. Practical capacity for a year is defined as 100,000 units requiring 20,000 standard direct labor hours. Budgeted overhead for the year is $76,000, of which $30,000 is fixed overhead. During the year, 96,000 units were produced using
19,000 direct labor hours. Actual annual overhead costs totaled $80,000, of which $29,600 is fixed overhead.
Required:
1. Calculate the fixed overhead spending and volume variances.
Fixed Overhead Spending Variance
Fixed Overhead Volume Variance
2. Calculate the variable overhead spending and efficiency variances.
Variable Overhead Spending Variance
Variable Overhead Efficiency Variance
3. Prepare the journal entries that reflect the following:
a. Assignment of overhead to production
b. Recognition of the incurrence of actual overhead
c. Recognition of overhead variances
d. Closing out overhead variances, assuming they are not material
Note: Close the variances with a debit balance first. For compound entries, if an amount box does not require an entry, leave it blank.
3
a.
b.
C.
$
d.
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