Barley Hopp, Inc., manufactures custom-ordered commemorative beer steins. Its st

Question

Barley Hopp, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information follows:

Barley Hopp had the following actual results last year:

Required:
Prepare the journal entry to record Barley Hopp’s fixed manufacturing overhead costs and related variances for last year. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) Enter debits before credits.

Record the entry for fixed manufacturing overhead costs and variances.

Standard Quantity Standard Price (Rate) Standard Unit Cost Direct materials (clay) 1.5 lbs. $ 1.60 per lb. $ 2.40 Direct labor 1.8 hrs. $ 6.00 per hr. 10.80 Variable manufacturing overhead (based on direct labor hours) 1.8 hrs. $ 1.50 per hr. 2.70 Fixed manufacturing overhead ($251,460 ÷ 99,000 units) 2.54

Explanation / Answer

Answer)

Fixed over head budget variance:

Budgeted fixed overhead costs-actual fixed costs

:$[251460-320000]=$68540 unfavorable

Fixed overhead volume variance:

[STD. Volume -budgeted volume]×std. Price

[119100 units-99000units]×$2.54

=$51054 favourable

In journal entry we must debit any unfavorable variance along with standard over head expense and credit any favourable variance along with actual overhead expense

Journal entry

Date particulars debit($) credit ($) - work in process inventory 302514 Fixed Overhead budget variance 68540 Fixed Overhead volume variance 51054 Fixed Overhead expense 320000 Total 371054 371054

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