Question

Laughlin, Inc., uses a standard costing system. The predetermined overhead rates are calculated using practical capacity. Practical capacity for a year is defined as 1,000,000 units requiring 200,000 standard direct labor heur Required: 5,300 Fixed Overhead volume Varlance 30,000Unfavorabe the fixed Applied fixed OH. OH rate (AVOR) - (SVDR) Standard of the l assuming they are not Overtead Contrl

Answer 1

Answer:-

Fixed Overhead Variances Standard Labour Hours 200000 1000000 0.2 300000 Budgeted Units Standard Labour Hours Per Unit Budgeted Fixed Overhead Standard Direct Labour Hours Fixed OH Rate per labour Actual Fixed Overhead 294700 270000 020*1.5 Fixed overhead control (294700-270000) -24700 nfavorable Fixed overhead Spending Overhead: (Budgeted OH-Actual OH) 300000- 294700 Volume Overhead: (Applied OH Budgeted OH 5300 Favorable 30000 300000 unfavorable Varia ble Overhe a d riable Overhead: (750000-300000 Standard Direct Labour Hours Variable OH Rate per labour 450000 200000 2.25 505300 405000 100300 al Variable Overhead (800000-294700) d Variable Overhead 900000 0 20 225 Variable overhead control variance 505300-405000 Variable OH Spending Variance SR*Actual Hours Actual Variable OH Variable OH Spending Variance unfavorable 25 190000)1505300 unfavorable riable OH Efficiency Variance (Applied riable OH)SR Actual Hours) Variable OH Efficiency Variance: 405000- -22500 unfavorable 25 190000

Joumal Entries Accounts and Explanation Work in Process Variable Overhead Control Fixed Overhead Control (To record the assignement of overhead to Amount Amount 675,000 270,000 ucion Variable Overhead Control Fixed Overhead Control Miscellaneous Accounts 294,700 800,000 To record the incurrence ofactual Fixed Oyerhead Vblume Variance riable Overhead Spending Variance Variable Overhead E Fixed Overhead Spending Variance Fixed Overhead Control Variable Overhead Control (To record recognition of overhead 77,800 22,500 Variance 24,700 100,300 Cost of Goods Sold Fixed Overhead volume Variance Variable Overhead Spending Variance Variable Overhead E 70,300 30,000 77,800 22,500 Variance (To record closing out overhead variances) Fixed overhead spending variance Cost of 5,300 sold 5,300 (To record closing out overhead variances)

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