Problem 2 Speed Control Inc. Manufactures carburetors and uses a standard cost system. The standard factory overhead costs...

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Accounting

Problem 2 Speed Control Inc. Manufactures carburetors anduses a standard cost system.
Thestandard factory overhead costs per carburetor are based on machinehours and are as follows:
Variable overhead (3 hours at $4/hour) $12
Fixed overhead (3 hours at $5/hour) 15
Total overhead cost per unit 27
Based onan expectation of 12,000 carburetors per month.
Thefollowing additional information is available for the month ofDecember:
10,000 carburetor s were produced although 12,000 had beenscheduled for production.
32,000 machine hours were used
The standard direct labor rate is $9 per hour
The standard direct labor time per unit is 4 hours.
Variable overhead costs were $125,000
Fixed overhead costs were $185,000
Required:
a.       (6 points) Calculate thespending and efficiency variances for variable overhead.
     b. (6 points) Calculate the spending andproduction volume variances for fixed overhead.
     c. (8 points) Prepare journal entries forrecording (using the standard cost system from part a):
1) the actual variable overhead costs,
2) theallocation of variable overhead costs to WIP, and
3) thespending and efficiency variances for variable overhead.

Answer & Explanation Solved by verified expert

4.4 Ratings (809 Votes)

aVariable overhead spending variance Actual variable overhead Actual machine hour standard variable overhead rate per MH 125000 320004 125000 128000 3000 Favorable enter as 3000 F if needs to be entered as See Answer

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Problem 2 Speed Control Inc. Manufactures carburetors anduses a standard cost system.Thestandard factory overhead costs per carburetor are based on machinehours and are as follows:Variable overhead (3 hours at $4/hour)$12Fixed overhead (3 hours at $5/hour**)15Total overhead cost per unit27**Based onan expectation of 12,000 carburetors per month.Thefollowing additional information is available for the month ofDecember:10,000 carburetor s were produced although 12,000 had beenscheduled for production.32,000 machine hours were usedThe standard direct labor rate is $9 per hourThe standard direct labor time per unit is 4 hours.Variable overhead costs were $125,000Fixed overhead costs were $185,000Required:a. (6 points) Calculate thespending and efficiency variances for variable overhead. b. (6 points) Calculate the spending andproduction volume variances for fixed overhead. c. (8 points) Prepare journal entries forrecording (using the standard cost system from part a):1) the actual variable overhead costs,2) theallocation of variable overhead costs to WIP, and3) thespending and efficiency variances for variable overhead.

Problem 2 Speed Control Inc. Manufactures carburetors anduses a standard cost system.
Thestandard factory overhead costs per carburetor are based on machinehours and are as follows:

Variable overhead (3 hours at $4/hour)	$12
Fixed overhead (3 hours at $5/hour**)	15
Total overhead cost per unit	27
**Based onan expectation of 12,000 carburetors per month.

Thefollowing additional information is available for the month ofDecember:
10,000 carburetor s were produced although 12,000 had beenscheduled for production.
32,000 machine hours were used
The standard direct labor rate is $9 per hour
The standard direct labor time per unit is 4 hours.
Variable overhead costs were $125,000
Fixed overhead costs were $185,000

Required:
a. (6 points) Calculate thespending and efficiency variances for variable overhead.
b. (6 points) Calculate the spending andproduction volume variances for fixed overhead.
c. (8 points) Prepare journal entries forrecording (using the standard cost system from part a):
1) the actual variable overhead costs,
2) theallocation of variable overhead costs to WIP, and
3) thespending and efficiency variances for variable overhead.