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Need help computing manufacturing variances calculations and-(Answered)

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Need help computing manufacturing variances calculations and prepare journal entries for the application of overhead, the actual overhead,?and to record variances and close the overhead account. ?Thank you!


There is only one problem this week on manufacturing variance.

 


 

Apollo Sports manufacturers fabric tents. The poles are purchased from a vendor, so the only part manufactured is the actual

 

The company uses a standard cost system based on manufacturing 5,000 tents per month. Overhead is applied on a per-unit b

 

4,840 tents were produced. Management has a policy that all variances greater than 3% from standard should be investigated

 

actual costs are listed below:

 


 

Direct material

 

Direct labor

 

Overhead applied

 


 

Standard

 

18 yards at $3.20 per yard

 

6.5 hours at $16.00 per hour

 

$12.00 per tent

 


 

Direct material

 

Direct labor

 

Actual overhead

 


 

Actual

 

86,550 yards at $3.25 per yard

 

32,100 hours at $15.80 per hour

 

$56,750

 


 

INSTRUCTIONS:

 

1. Compute the total, price, and quantity variances for both materials and labor.

 

State if each variance is favorable or unfavorable.

 

2. Compute the total, volume, and budget overhead variances. State if favorable

 

or unfavorable.

 

3. Prepare journal entries for the application of overhead, the actual overhead,

 

and to record variances and close the overhead account. Note that on the actual

 

overhead you will not have individual expense account amount, so just list

 

"various" for the expense accounts.

 

4. Always label all of your work.

 

SOLUTION:

 

First, compute total standard quantity at actual production of 4,840 tents.

 

Direct material

 

Direct labor

 

Overhead applied

 

Total materials variance: (actual qty ? actual price) ? (standard qty ? standard price)

 

- Positive number is unfavorable.

 

Materials price variance: (actual qty ? actual price) ? (actual qty ? std price)

 

-

 


 

Unfavorable.

 


 

Materials quantity variance: (actual quantity ? std price) ? (standard qty ? std price)

 

- Negative number is favorable.

 

- Check that quantity and price variance eq

 


 

Total labor variance: (actual hours ? actual rate) ? (standard hours ? standard rate)

 

-

 


 

Positive number is unfavorable.

 


 

Labor rate variance: (actual hours ? actual rate) ? (actual hours ? std rate)

 


 

Labor quantity variance: (actual hours ? std rate) ? (standard hours ? std rate)

 

-

 


 

-

 


 

Unfavorable.

 


 

-

 


 

Negative number is favorable.

 

Check that quantity and rate variance equ

 


 

-

 


 

Negative number is over applied (favorab

 


 

Total overhead variance: (actual overhead) ? (actual quantity ? standard rate)

 


 

Overhead volume variance: (actual production qty ? std rate) ? (standard production qty ? std rate)

 

- Negative number is favorable.

 

Overhead budget variance (total variance ? quantity variance)

 

-

 


 

-

 


 

Positive number is unfavorable.

 


 

Journal entries:

 

Application of overhead

 


 

Debit

 

Work in process

 

Manufacturing overhead

 


 

Recording actual overhead

 

Manufacturing overhead

 

Various expense accounts

 

Recording variance and closing overhead account

 

Manufacturing overhead

 

Overhead budget variance

 

Overhead

 


 

Credit

 

-

 


 

-

 


 

y part manufactured is the actual fabric tent.

 

Overhead is applied on a per-unit basis. In May,

 

m standard should be investigated. Standard and

 


 

number is unfavorable.

 


 

e number is favorable.

 

hat quantity and price variance equals total variance.

 


 

number is unfavorable.

 


 

e number is favorable.

 

hat quantity and rate variance equals total variance.

 


 

e number is over applied (favorable) overhead.

 


 

e number is favorable.

 


 

number is unfavorable.

 


 

 

Paper#9210379 | Written in 27-Jul-2016

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