Prepare appropriate journal entries for the four-variance

Question

Four-Variance Analysis of Total Overhead Variance Franklin Glass Works has the capacity to manufacture 200,000 units for the year ended November 30, 2010. The standard cost sheet speci- fies two direct labor hours (DLHs) for each unit manufactured. Total factory overhead was budgeted at $900,000 for the year with a fixed overhead rate of $3 per unit. Both fixed and variable overhead are assigned to products on the basis of standard DLHs. The actual data for the year ended November 30, 2010, follow:

Units manufactured	198,000
Direct labor hours worked	440,000
Variable factory overhead incurred	$352,000
Fixed factory overhead incurred	$575,000

Required

1. Determine the following for the year just completed:

a. Total standard hours allowed for the units manufactured.

b. Variable overhead efficiency variance.

c. Variable overhead spending variance.

d. Fixed overhead spending variance.

e. Total fixed overhead cost applied to units manufactured.

f. Production-volume variance.

2. Prepare appropriate journal entries for the four-variance analysis. Assume the company uses only two overhead accounts, one for variable overhead, the other for fixed overhead.

3. Provide a concise explanation of each of the four overhead variances you calculated.

Answer 1

For the Four-Variance analysis of Total Overhead Variance problem illustrated below, solve it by applying the proper concept and show the work in a word document. Franklin Glass Works consists of the capacity to manufacture 200,000 units for the year ended November 30, 2010. The standard cost sheet states two direct labor hours for every unit prepared. Total factory overhead was budgeted at $900,000 for the year having a fixed overhead rate of $3 per unit. Both the fixed and variable overhead are allocated to products on the basis of standard DLHs. The real data for the year ended November 30, 2010, follow: Q1. Find out the given for the year just completed: a) Total standard hrs permitted for the units manufactured. b) Variable overhead efficiency variance. c) Variable overhead spending variance. d) Fixed overhead spending variance. e) Total fixed overhead cost applied to the units prepared. f) Production-volume variance.