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Overhead Variance. Download free ebooks at bookboon.com
38 Variance Analysis Tools for Enterprise Performance Evaluation 4.17 Journal Entry for Fixed Overhead Variances
The diagram below illustrates the flow of fixed costs into the Factory Overhead account, and on to
Work in Process and the related variances. Brain power
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39 Variance Analysis Tools for Enterprise Performance Evaluation Following is a compound journal entry to apply fixed factory overhead to production and record the
Following is a compound journal entry to apply fixed factory overhead to production and record the
* Work in Process Inventory 61,200 Fixed Overhead Volume Variance 10,800 Fixed OH Spending Variance 2,000 Factory Overhead 70,000 To increase work in process for the standard
fixed overhead, and record the related volume
and spending variances 4.18 Recapping Standards and Variances The foregoing provided a painstakingly detailed account of the variances for Blue Rail. Before
4.18 Recapping put the entire subject inVariances goal is to compare standard costs to
moving on, it is best to Standards and perspective. The
The foregoing provided a painstakingly detailed account ofstandard costs for Blue Rail. Before
actual costs. Blue Rail’s work in process is recorded at the the variances found in the Blue circles
movingthe work best to put the entire subject in perspective. Thethe amounts found in blue circles),to
(hint – on, it is in process inventory of blue rails is recorded at goal is to compare standard costs
actual actual costs Rail’s work in process is recorded at the standard costs found intableBlue circles
while costs. Blue are found in the red circles. These amounts are recapped in the the below:
(hint – the work in process inventory of blue rails is recorded at the amounts found in blue circles),
while actual costs are found in the red circles. These amounts are recapped in the table below: Actual Cost
to Work in
Variances Direct Materials
Quantity Variance $369,000 $340,000 $ (29,000) Direct Labor
Efficiency Variance $175,000 $183,600 $ Variable Factory Overhead
Efficiency Variance $105,000 $102,000 $ (3,000) Fixed Factory Overhead
Volume Variance $ 70,000 $ 61,200 $ (8,800) AGGREGATE $719,000 $686,800 $ (32,200) * 8,600 Specific
$ 50 000
$ (10,800) You will notice that the standard cost of $686,800 corresponds to the amounts assigned to work in
process inventory via the various journal entries, while the total varian...
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