tools-for-enterprise-performance-evaluation

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Unformatted text preview: e Total Fixed 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 Please click the advert By 2020, wind could provide one-tenth of our planet’s electricity needs. Already today, SKF’s innovative knowhow is crucial to running a large proportion of the world’s wind turbines. Up to 25 % of the generating costs relate to maintenance. These can be reduced dramatically thanks to our systems for on-line condition monitoring and automatic lubrication. We help make it more economical to create cleaner, cheaper energy out of thin air. By sharing our experience, expertise, and creativity, industries can boost performance beyond expectations. Therefore we need the best employees who can meet this challenge! The Power of Knowledge Engineering Plug into The Power of Knowledge Engineering. Visit us at www.skf.com/knowledge Download free ebooks at bookboon.com 39 Variance Analysis Tools for Enterprise Performance Evaluation Following is a compound journal entry to apply fixed factory overhead to production and record the related variances: Following is a compound journal entry to apply fixed factory overhead to production and record the related variances: * 8-31-XX * 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 Account For Standard Cost Assigned to Work in Process Overall Variances Direct Materials Price Variance Quantity Variance $369,000 $340,000 $ (29,000) Direct Labor * Rate Variance Efficiency Variance $175,000 $183,600 $ Variable Factory Overhead Spending Variance Efficiency Variance $105,000 $102,000 $ (3,000) Fixed Factory Overhead Spending Variance Volume Variance $ 70,000 $ 61,200 $ (8,800) AGGREGATE $719,000 $686,800 $ (32,200) * 8,600 Specific Variances $ (41,000) $ 12,000 $ 50 000 $ (41,400) $ 20,000 $ (23,000) $ 2,000 $ (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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This note was uploaded on 06/07/2013 for the course BA 201 taught by Professor Cuongvu during the Fall '13 term at RMIT Vietnam.

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