Question

Crystal Glassware Company has the following standards and flexible-budget data.

  

Standard variable-overhead rate	$	7.00	per direct-labor hour
Standard quantity of direct labor		2	hours per unit of output
Budgeted fixed overhead	$	100,000
Budgeted output		25,000	units

  

Actual results for April are as follows:

  

Actual output		20,000	units
Actual variable overhead	$	348,000
Actual fixed overhead	$	98,000
Actual direct labor		48,000	hours

  

Required:

Prepare journal entries for the following transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

• Record the incurrence of actual variable overhead and actual fixed overhead.
• Add variable and fixed overhead to Work-in-Process Inventory.
• Close underapplied or overapplied overhead into Cost of Goods Sold.

Answer 1

	Calculation Of Underapplied / Overapplied Overhead
	Variable Overhead:
a	Standard Overhead: 48000 Hours *$7 per hour					$ 3,36,000
b	Actual Overhead					$ 3,48,000
c	Therefore underapplied overhead (b-a)					$     12,000
	Fixed Overhead
a	Budgeted Overhead					$ 1,00,000
b	Actual Overhead					$     98,000
c	therefore overapplied overhead (a-b)					$       2,000
	Net (underapplied)					$     10,000
	Journal Entries
	Date	Account Title	Debit	Credit
		Factory Overhead	$       4,46,000
		Variable overhead Payable / Cash		$ 3,48,000
		Fixed Overhead Payable / Cash		$     98,000
		(Actual Overhead paid recorded)
		Work In Progress Acount	$       4,36,000
		Factory Overhead (variable)		$ 3,36,000
		Factory Overhead (Fixed)		$ 1,00,000
		(being overhead applied)
		Cost of good sold	$           10,000
		Factory Overhead		$     10,000
		(net underapplied overhead closed)