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Patel and Sons Incorporated uses a standard cost system to apply factory overhead costs 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. Based on the information provided above, calculate the following factory overhead variances for the year. Indicate whether each variance is favorable (F) or unfavorable (U). (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) (a) Total overhead variance (b) Total flexible-budget variance (c) Production volume variance $ 50,000 Unfavorable

Patel and Sons Incorporated uses a standard cost system to apply factory overhead costs 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. Based on the information provided above, calculate the following factory overhead variances for the year. Indicate whether each variance is favorable (F) or unfavorable (U). (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) (a) Total overhead variance (b) Total flexible-budget variance (c) Production volume variance $ 50,000 Unfavorable

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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. Based on the information provided above, calculate the following factory overhead variances for the year. Indicate whether each variance is favorable (F) or unfavorable (U). (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) (a) Total overhead variance (b) Total flexible-budget variance (c) Production volume variance $ 50,000 Unfavorable
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. Based on the information provided above, calculate the following factory overhead variances for the year. Indicate whether each variance is favorable (F) or unfavorable (U). (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) (a) Total overhead variance (b) Total flexible-budget variance (c) Production volume variance $ 50,000 Unfavorable
Based on the information provided above, provide an appropriate end-of-year closing entry for each of the following two independent situations: (a) the net factory overhead cost variance is closed entirely to Cost of Goods Sold (CSG), and (b) the net factory overhead variance is allocated among WIP Inventory, Finished Goods Inventory, and CGS using the following percentages: 10%, 20%, and 70%, respectively. (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 1 Record the net variance closed to cost of goods sold. Note: Enter debits before credits. Transaction a 2 < Record entry Show Transcribed Text 1 Journal entry worksheet General Journal 2 Clear entry Transaction b Note: Enter debits before credits. S Debit General Journal Credit View general journal Ĉ Record the net variance allocated to ending inventories and Cost of goods sold. > Debit Credit
Transcribed Image Text:Based on the information provided above, provide an appropriate end-of-year closing entry for each of the following two independent situations: (a) the net factory overhead cost variance is closed entirely to Cost of Goods Sold (CSG), and (b) the net factory overhead variance is allocated among WIP Inventory, Finished Goods Inventory, and CGS using the following percentages: 10%, 20%, and 70%, respectively. (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 1 Record the net variance closed to cost of goods sold. Note: Enter debits before credits. Transaction a 2 < Record entry Show Transcribed Text 1 Journal entry worksheet General Journal 2 Clear entry Transaction b Note: Enter debits before credits. S Debit General Journal Credit View general journal Ĉ Record the net variance allocated to ending inventories and Cost of goods sold. > Debit Credit
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