Required information [The following information applies to the questions displayed below.] The Platter Valley factory of Bybee Industries manufactures field boots. The cost of each boot includes direct materials, direct labor, and manufacturing (factory) overhead. The firm traces all direct costs to products, and it assigns overhead cost to products based on direct labor hours. The company budgeted $15,000 variable factory overhead cost, $90,000 for fixed factory overhead cost and 2,500 direct labor hours (its practical capacity) to manufacture 5,000 pairs of boots in March. The factory used 2,700 direct labor hours in March to manufacture 4,800 pairs of boots and spent $15,600 on variable overhead during the month. The actual fixed overhead cost incurred for the month was $92,000. Required: 1. Compute the fixed overhead spending (budget) variance and the production volume variance for March and indicate whether each variance is favorable (F) or unfavorable (U). 2. Compute the fixed overhead flexible-budget variance for March. Is this variance favorable (F) or unfavorable (U)? 3. Provide the appropriate journal entry to record the fixed overhead spending variance and the appropriate journal entry to record the production volume variance for March. Assume that the company uses a single account, Factory Overhead, to record overhead costs.
Required information [The following information applies to the questions displayed below.] The Platter Valley factory of Bybee Industries manufactures field boots. The cost of each boot includes direct materials, direct labor, and manufacturing (factory) overhead. The firm traces all direct costs to products, and it assigns overhead cost to products based on direct labor hours. The company budgeted $15,000 variable factory overhead cost, $90,000 for fixed factory overhead cost and 2,500 direct labor hours (its practical capacity) to manufacture 5,000 pairs of boots in March. The factory used 2,700 direct labor hours in March to manufacture 4,800 pairs of boots and spent $15,600 on variable overhead during the month. The actual fixed overhead cost incurred for the month was $92,000. Required: 1. Compute the fixed overhead spending (budget) variance and the production volume variance for March and indicate whether each variance is favorable (F) or unfavorable (U). 2. Compute the fixed overhead flexible-budget variance for March. Is this variance favorable (F) or unfavorable (U)? 3. Provide the appropriate journal entry to record the fixed overhead spending variance and the appropriate journal entry to record the production volume variance for March. Assume that the company uses a single account, Factory Overhead, to record overhead costs.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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![Required information
[The following information applies to the questions displayed below.]
The Platter Valley factory of Bybee Industries manufactures field boots. The cost of each boot includes direct
materials, direct labor, and manufacturing (factory) overhead. The firm traces all direct costs to products, and it
assigns overhead cost to products based on direct labor hours.
The company budgeted $15,000 variable factory overhead cost, $90,000 for fixed factory overhead cost and 2,500
direct labor hours (its practical capacity) to manufacture 5,000 pairs of boots in March.
The factory used 2,700 direct labor hours in March to manufacture 4,800 pairs of boots and spent $15,600 on
variable overhead during the month. The actual fixed overhead cost incurred for the month was $92,000.
Required:
1. Compute the fixed overhead spending (budget) variance and the production volume variance for March and indicate whether each
variance is favorable (F) or unfavorable (U).
2. Compute the fixed overhead flexible-budget variance for March. Is this variance favorable (F) or unfavorable (U)?
3. Provide the appropriate journal entry to record the fixed overhead spending variance and the appropriate journal entry to record the
production volume variance for March. Assume that the company uses a single account, Factory Overhead, to record overhead costs.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe77ea8b4-668b-49f7-a8d1-374d3394961f%2F2a11b53a-5197-44c3-9319-aeee5db7bf96%2Ft0h5avu_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
The Platter Valley factory of Bybee Industries manufactures field boots. The cost of each boot includes direct
materials, direct labor, and manufacturing (factory) overhead. The firm traces all direct costs to products, and it
assigns overhead cost to products based on direct labor hours.
The company budgeted $15,000 variable factory overhead cost, $90,000 for fixed factory overhead cost and 2,500
direct labor hours (its practical capacity) to manufacture 5,000 pairs of boots in March.
The factory used 2,700 direct labor hours in March to manufacture 4,800 pairs of boots and spent $15,600 on
variable overhead during the month. The actual fixed overhead cost incurred for the month was $92,000.
Required:
1. Compute the fixed overhead spending (budget) variance and the production volume variance for March and indicate whether each
variance is favorable (F) or unfavorable (U).
2. Compute the fixed overhead flexible-budget variance for March. Is this variance favorable (F) or unfavorable (U)?
3. Provide the appropriate journal entry to record the fixed overhead spending variance and the appropriate journal entry to record the
production volume variance for March. Assume that the company uses a single account, Factory Overhead, to record overhead costs.
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