[The following information applies to the questions displayed below.] 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, 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
[The following information applies to the questions displayed below.] 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, 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![[The following information applies to the questions displayed below.]
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, 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
2
Record the net variance allocated to ending inventories and Cost of goods sold.
Note: Enter debits before credits.
Transaction
b
Record entry
General Journal
Clear entry
Debit
Credit
View general journal](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0be4a385-9da3-4d58-95f0-43e59a6a2035%2F6d71be01-491b-4cd1-b2a5-a4cce7ff1424%2Fxhbtpxh_processed.jpeg&w=3840&q=75)
Transcribed Image Text:[The following information applies to the questions displayed below.]
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, 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
2
Record the net variance allocated to ending inventories and Cost of goods sold.
Note: Enter debits before credits.
Transaction
b
Record entry
General Journal
Clear entry
Debit
Credit
View general journal
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