Patel and Sons Incorporated uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 50,000 machine hours per year, which represents 25,000 units of output. Annual budgeted fixed factory overhead costs are $250,000 and the budgeted variable factory overhead cost rate is $4 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 20,000 units, which took 41,000 machine hours. Actual fixed factory overhead costs for the year amounted to $245,000, while the actual variable overhead cost per unit was $3.90. Brief Exercise 15-19 (Static) Provide the appropriate journal entries..(LO 15-4] Based on the information provided above, provide the appropriate journal entries (a) to record the overhead cost variances for the period (thereby closing out the balance in the Factory Overhead account), and (b) to close the variance accounts to the Cost of Goods Sold (CGS) account at the end of the period. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Patel and Sons Incorporated uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 50,000 machine hours per year, which represents 25,000 units of output. Annual budgeted fixed factory overhead costs are $250,000 and the budgeted variable factory overhead cost rate is $4 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 20,000 units, which took 41,000 machine hours. Actual fixed factory overhead costs for the year amounted to $245,000, while the actual variable overhead cost per unit was $3.90. Brief Exercise 15-19 (Static) Provide the appropriate journal entries..(LO 15-4] Based on the information provided above, provide the appropriate journal entries (a) to record the overhead cost variances for the period (thereby closing out the balance in the Factory Overhead account), and (b) to close the variance accounts to the Cost of Goods Sold (CGS) account at the end of the period. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
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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![Patel and Sons Incorporated uses a standard cost system to apply factory overhead costs to units produced.
Practical capacity for the plant is defined as 50,000 machine hours per year, which represents 25,000 units of
output. Annual budgeted fixed factory overhead costs are $250,000 and the budgeted variable factory overhead
cost rate is $4 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 20,000 units, which took 41,000 machine hours. Actual fixed
factory overhead costs for the year amounted to $245,000, while the actual variable overhead cost per unit was
$3.90.
Brief Exercise 15-19 (Static) Provide the appropriate journal entries.. (LO 15-4]
Based on the information provided above, provide the appropriate journal entries (a) to record the overhead cost variances for the
period (thereby closing out the balance in the Factory Overhead account), and (b) to close the variance accounts to the Cost of Goods
Sold (CGS) account at the end of the period. (If no entry is required for a transaction/event, select "No journal entry required" in the
first account field.)
Answer is not complete.
No
Transaction
General Journal
Debit
Credit
Production volurne variance
Variable overhead spending variance
Fixed overhead spending variance
Variable overhead spending variance
Factory overhead
2
b.
Cost of goods sold
Factory overhead
00000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F264ec024-91a9-4da1-aedc-4284cec9541b%2F1ab047b4-087d-4a35-9c98-c81c350380cf%2Fxba62dp_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Patel and Sons Incorporated uses a standard cost system to apply factory overhead costs to units produced.
Practical capacity for the plant is defined as 50,000 machine hours per year, which represents 25,000 units of
output. Annual budgeted fixed factory overhead costs are $250,000 and the budgeted variable factory overhead
cost rate is $4 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 20,000 units, which took 41,000 machine hours. Actual fixed
factory overhead costs for the year amounted to $245,000, while the actual variable overhead cost per unit was
$3.90.
Brief Exercise 15-19 (Static) Provide the appropriate journal entries.. (LO 15-4]
Based on the information provided above, provide the appropriate journal entries (a) to record the overhead cost variances for the
period (thereby closing out the balance in the Factory Overhead account), and (b) to close the variance accounts to the Cost of Goods
Sold (CGS) account at the end of the period. (If no entry is required for a transaction/event, select "No journal entry required" in the
first account field.)
Answer is not complete.
No
Transaction
General Journal
Debit
Credit
Production volurne variance
Variable overhead spending variance
Fixed overhead spending variance
Variable overhead spending variance
Factory overhead
2
b.
Cost of goods sold
Factory overhead
00000
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