Asked by Megan Shook on May 22, 2024
Verified
The following information comes from the records of Magno Co.for the current period.
a.Compute the overhead controllable and volume variances.In each case,state whether the variance is favorable or unfavorable.
b.Prepare the journal entries to charge overhead costs to work in process and the overhead variances to their proper accounts.
Factory overhead (based on budgeted production of 24,500 units)
Variable overhead $2.25/direct labor hour
Fixed overhead $1.95/direct labor hour
Overhead Controllable Variances
The portion of overhead costs that can be directly managed or influenced by decisions made by management.
Volume Variances
The difference between the planned or standard quantities expected and actual quantities, affecting inventory, sales, or production levels.
Work in Process
A term referring to items and materials that are being transformed into finished products but are not yet complete.
- Determine the differences in variable and fixed overhead costs and distinguish whether they are advantageous or disadvantageous.
- Draft journal entries to account for discrepancies and adjustments in standard costing.
Verified Answer
Learning Objectives
- Determine the differences in variable and fixed overhead costs and distinguish whether they are advantageous or disadvantageous.
- Draft journal entries to account for discrepancies and adjustments in standard costing.
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