Question

Barley Hopp, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information follows:

	Standard Quantity		Standard Price (Rate)			Standard Unit Cost
Direct materials (clay)	1.5	lbs.	$	1.60	per lb.	$	2.40
Direct labor	1.8	hrs.	$	6.00	per hr.		10.80
Variable manufacturing overhead (based on direct labor hours)	1.8	hrs.	$	1.50	per hr.		2.70
Fixed manufacturing overhead ($251,460 ÷ 99,000 units)							2.54

Barley Hopp had the following actual results last year:

Number of units produced and sold		119,100
Number of pounds of clay used		160,000
Cost of clay	$	248,000
Number of labor hours worked		164,100
Direct labor cost	$	456,600
Variable overhead cost	$	191,100
Fixed overhead cost	$	320,000

Required:
Prepare the journal entry to record Barley Hopp’s fixed manufacturing overhead costs and related variances for last year. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) Enter debits before credits.

Record the entry for fixed manufacturing overhead costs and variances.

Answer 1

Answer)

Fixed over head budget variance:

Budgeted fixed overhead costs-actual fixed costs

:$[251460-320000]=$68540 unfavorable

Fixed overhead volume variance:

[STD. Volume -budgeted volume]×std. Price

[119100 units-99000units]×$2.54

=$51054 favourable

In journal entry we must debit any unfavorable variance along with standard over head expense and credit any favourable variance along with actual overhead expense

Journal entry

Date	particulars	debit($)	credit ($)
-	work in process inventory	302514
	Fixed Overhead budget variance	68540
	Fixed Overhead volume variance		51054
	Fixed Overhead expense		320000
	Total	371054	371054