Chapter 8, Problem 8.36P

Journal entries (continuation of 8-35).

1. A. Prepare journal entries for variable and fixed manufacturing overhead (you will need to calculate the various variances to accomplish this).

  Required

1. B. Overhead variances are written off to the Cost of Goods Sold (COGS) account at the end of the fiscal year. Show how COGS is adjusted through journal entries.

Manufacturing Overhead	Actual Results	Flexible Budget	Allocated Amount
Variable	$ 71,808	$ 80,640	$ 80,640
Fixed	360,672	51,360	368,640

Budgeted number of output units: 915

Planned allocation rate: 2 machine-hours per unit

Actual number of machine-hours used: 1,632

Static-budget variable manufacturing overhead costs: $76,860

Compute the following quantities (you should be able to do so in the prescribed order):

  Required

1. A. Budgeted number of machine-hours planned
2. B. Budgeted fixed manufacturing overhead costs per machine-hour
3. C. Budgeted variable manufacturing overhead costs per machine-hour
4. D. Budgeted number of machine-hours allowed for actual output produced
5. E. Actual number of output units
6. F. Actual number of machine-hours used per output unit