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:

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.)

Standard Quantity Standard Price (Rate) Standard Unit Cost Direct materials (clay) 1.7 lbs. $ 1.90 per lb. $ 3.23 Direct labor 2.0 hrs. $ 6.00 per hr. 12.00 Variable manufacturing overhead (based on direct labor hours) 2.0 hrs. $ 1.20 per hr. 2.40 Fixed manufacturing overhead ($222,500 ÷ 89,000 units) 2.50

Explanation / Answer

Fixed Overhead Spending Variance = Budgeted Fixed Overhead - Actual Fixed Overhead

= $222500 - $335000

= $112500

Fixed Overhead Volume Variance = Standard Rate * (Actual Unit - Standard Unit)

= $2.50 * (110000 - 89000)

= $52500

Journal Entry :-

Date Particulars Debit($) Credit($) Cost of Goods Sold A/c Dr. (110000*2.50) 275000 Fixed Overhead Spending Variance A/c Dr. 112500 To Fixed Overhead Volume Variance A/c 52500 To Salaries Payable or Cash A/c 335000

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