Question

Overhead Variances, Four-Variance Analysis, Journal Entries Laughlin, Inc., uses a standard costing system. The predetermined overhead rates are calculated using practical capacity. Practical capacity for a year is defined as 1,000,000 units requiring 200,000 standard direct labor hours. Budgeted overhead for the year is $750,000, of which $300,000 is fixed overhead. During the year, 900,000 units were produced using 190,000 direct labor hours. Actual annual overhead costs totaled $800,000, of which $294,700 is fixed overhead. Required: 1. Calculate the fixed overhead spending and volume variances. Fixed Overhead Spending Variance $ Favorable Fixed Overhead Volume Variance $ Unfavorable 2. Calculate the variable overhead spending and efficiency variances. Variable Overhead Spending Variance $ Favorable Variable Overhead Efficiency Variance $ Favorable 3. Prepare the journal entries that reflect the following: Assignment of overhead to production Recognition of the incurrence of actual overhead Recognition of overhead variances Closing out overhead variances, assuming they are not material Note: Close the variances with a debit balance first. For compound entries, if an amount box does not require an entry, leave it blank or enter "0". Please show all calculations AND JOURNAL ENTRIES. Thank you!

Answer 1