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Required information [The following information applies to the questions displayed below.) The Platter Valley factory of Bybe

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Answer #1
1) Fixed OH spending variance = Budgeted OH - Actual OH
= $ 90000 - $ 92000
= $      2,000.00 (Unfavorable)
Fixed OH Volume variance = Recovered OH - Budgeted OH
= $ 86400 - $ 90000
= $      3,600.00 (Unfavorable)

Workings:

Fixed OH
Budgeted Hours 2500
Budgeted OH $ 90,000.00
Recovery Rate $         36.00
Standard Hours 2400 (2500 x 4800/5000)
Recovered OH $ 86,400.00
Actual OH $ 92,000.00
Fixed OH spending variance = Budgeted OH - Actual OH
= $ 90000 - $ 92000
= $   2,000.00 (Unfavorable)
Fixed OH Volume variance = Recovered OH - Budgeted OH
= $ 86400 - $ 90000
= $   3,600.00 (Unfavorable)
2) Flexible
Particulars Actual Budget Workings Variance
Fixed OH $    92,000.00 $   90,000.00 $    2,000.00 (Unfavorable)
3) Journal Entries Debit Credit
Fixed OH spending variance $      2,000.00
To Factory OH $     2,000.00
Production volume variance $      3,600.00
To Factory OH $     3,600.00
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