Question 2 CRAZY Co, is a major producer of beauty products. The company uses a standard cost system to help control costs. Manufacturing overhead is applied to production on the basis of standard direct labor-hours. The company has a standard of 10 labor hours per unit. According to the company's planning budget, the following manufacturing overhead costs should be incurred at an activity level of 17,500 labor-hours (the denominator activity level): Variable manufacturing overhead cost . ....$ 175,000 Fixed manufacturing overhead cost . . . .. Total manufacturing overhead cost ........ $595,000 $420,000 During the most recent year, the following operating results were recorded: Activity: Actual Production. . .... Total Actual labor-hours worked . . ... 1,600 15,000 Cost: Actual variable manufacturing overhead cost incurred ..... $156,000 Actual fixed manufacturing overhead cost incurred . . $418,800

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Q) Prepare journal entries for variable and fixed manufacturing overhead costs and variances;
write off these variances to cost of goods sold.

Question 2
CRAZY Co, is a major producer of beauty products. The company uses a standard cost system to
help control costs. Manufacturing overhead is applied to production on the basis of standard
direct labor-hours. The company has a standard of 10 labor hours per unit.
According to the company's planning budget, the following manufacturing overhead costs
should be incurred at an activity level of 17,500 labor-hours (the denominator activity level):
Variable manufacturing overhead cost .....$ 175,000
Fixed manufacturing overhead cost ..
Total manufacturing overhead cost
$420,000
... $595,000
During the most recent year, the following operating results were recorded:
Activity:
Actual Production. . . .
Total Actual labor-hours worked . .
1,600
15,000
Cost:
Actual variable manufacturing overhead cost incurred..... $156,000
Actual fixed manufacturing overhead cost incurred .....
$418,800
.
Transcribed Image Text:Question 2 CRAZY Co, is a major producer of beauty products. The company uses a standard cost system to help control costs. Manufacturing overhead is applied to production on the basis of standard direct labor-hours. The company has a standard of 10 labor hours per unit. According to the company's planning budget, the following manufacturing overhead costs should be incurred at an activity level of 17,500 labor-hours (the denominator activity level): Variable manufacturing overhead cost .....$ 175,000 Fixed manufacturing overhead cost .. Total manufacturing overhead cost $420,000 ... $595,000 During the most recent year, the following operating results were recorded: Activity: Actual Production. . . . Total Actual labor-hours worked . . 1,600 15,000 Cost: Actual variable manufacturing overhead cost incurred..... $156,000 Actual fixed manufacturing overhead cost incurred ..... $418,800 .
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