Compute the spending and idle capacity variances

Question:

Transfer Entries and Variance Analysis. A distribution of the actual factory overhead of the Columbus Manufacturing Company for the past year is given on page 275. Budgeted factory overhead for the four producing departments (including apportioned service department overhead) is also given for two levels of activity. The company uses a predetermined rate for each producing depart­ment based on labor hours at the normal capacity level. Actual hours worked last year were 17,000 for each of the four producing departments

 Actual Factory Overhead Total A B C D x Y Z Actual expenses \$1 0,000 \$14,000 \$4,000 \$8,000 \$3,000 \$5,000 \$6,000 \$50,000 Z's expenses 1,500 750 1,250 500 1,000 1.000 6,000 Y's expenses 1,800 1,200 1,800 600 600 \$6.000 X's expenses 2,000 1,000 1,200 400 \$4,600 Total \$1 5,300 516,950 58.250 59,500 \$50,000

 20,000 Hours (Normal) 16,000 Hours Department A \$17,800 \$15,000 Department B 20,200 17,800 Department C 10,600 9,400 Department D 10,600 9,400 Total \$59,200 \$51,600

Required:

(1) Assuming that the actual factory overhead incurred was charged to a single factory overhead control account, prepare entries to record

(a) the transfer of the actual factory overhead to producing departments and (b) the applied factory overhead of Departments A and B only.

(2) Compute the spending and idle capacity variances for Departments A and B only.

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##### Reference No:- TGS02054783

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