Question

Cooper Corporation produces decorator wall coverings. Budgeted production is 240,000 square feet per month, and the standard direct labor requirement to make this amount is 6,000 hours. All overhead is allocated based on direct labor hours. The following information is available: Production in units Total labor hours Budgeted Amounts 208,000 5,200 Actual Results 268,000 6,700 Total variable overhead Total fixed overhead Total overhead $ 7,800 $ 5,980 $ 13,780 $ 10,050 $ 6,410 $ 16, 460

1.

2.

3.

Answer 1

1.

DATE	ACCOUNT TITTLE AND EXPLANATION	DEBIT	CREDIT
	work in process	$101
	factory overhead		$101
	(to record overhead to work in process inventory account)

2. overhead spending variance=$910 favorable(1340F+430U))

variable overhead=(actual hour worked * actual variable overhead rate)-(actual hour worked*standard variable overhead rate)

=(6700*2.45)-(6700*2.65)

=16415-17755 =1340 favorable

fixed overhead =actual fixed overhead - budgeted fixed overhead

=6410-5980 =430 unfavorable

note: overhead rate =overhead/direct labour hours *100

3.overhead volume variance= 1725 FAVORABLE

fixed overhead application rate=5980/5200=$1.15

=6700*1.15=7705

fixed overhead volume variance=7705-5980=1725 favorable