hapter 8 3) Hot Corporation manufactures air conditioning units. It allocate all
ID: 2540357 • Letter: H
Question
hapter 8 3) Hot Corporation manufactures air conditioning units. It allocate all overhead based on direct compiled the following data for September overhead expenditures: labor hours. Hot has Budgeted output units (finished goods) Budgeted fixed manufacturing overhead Budgeted variable manufacturing overhead Budgeted direct manufacturing labor hours Fixed manufacturing costs incurred Direct manufacturing labor hours used Variable manufacturing costs incurred Actual units manufactured 3,200 units $20,000 $5 per direct labor hour 2 hours per unit $26,000 7.200 $35,600 3,400 a. Compute the variable overhead variances. b. Make the jounal entry'(s) to record Hot's variable overhead and variances for September. c. Compute the fixed overhead variances. d. Make the journal entry(s) to record Hot's fixed overhead and variances for September.Explanation / Answer
a) Variable Overhead Variance= (Standard hrs for actual output * Standard variable overhead rate)-Actual Overhead Cost
= (2*3400*5)-35600
=34000-35600
= $1600 Adverse
b) ournal Entry for recording Variable Overhead & Variances for September
Particulars Debit Credit
Work in Process Inventory 34000
Variable Overhead Variance 1600
Variable Overhead Expense 35600
c) Fixed Overhead Cost Variance =(Standard hrs for actual output* Standard fixed rate )-Actual fixed overhead
= (2*3400*3.125#)-26000
= 21250-26000
= $4750 Adverse
d) Journal Entry for recording Fixed Overhead & Variances for September
Particulars Debit Credit
Work in Process Inventory 21250
Fixed Overhead Variance 4750
Fixed Overhead Expense 26000
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