Chapter 8, Problem 8.28E

Straightforward coverage of manufacturing overhead, standard-costing system. The Brazil division of an American telecommunications company uses standard costing for its machine-paced production of telephone equipment. Data regarding production during June are as follows:

Variable manufacturing overhead costs incurred	$537,470
Variable manufacturing overhead cost rate	$7 per standard machine-hour
Fixed manufacturing overhead costs incurred	$146,101
Fixed manufacturing overhead costs budgeted	$136,000
Denominator level in machine-hours	68,000
Standard machine-hour allowed per unit of output	1.2
Units of output	66,500
Actual machine-hours used	75,700
Ending work-in-process inventory	0

1. A. Prepare an analysis of all manufacturing overhead variances. Use the 4-variance analysis framework illustrated in Figure 8-4 (page 304).

  Required

1. B. Prepare journal entries for manufacturing overhead costs and their variances.
2. C. Describe how individual variable manufacturing overhead items are controlled from day to day.
3. D. Discuss possible causes of the variable manufacturing overhead variances.