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The Lopez Co. uses a standard costing system in its auto part plant. Its standard...

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Accounting

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The Lopez Co. uses a standard costing system in its auto part plant. Its standard cost of an auto part, based on a denominator level of 4,000 output units per year, included 6 machine-hours of variable manufacturing overhead at $8 per hour and 6 machine hours of fixed MO at $ 55 per hour. Actual output produced was 4,400 units. Variable MO incurred was $245,000. Fixed MO incurred was $373,000. Actual machine hours were 28,400. Required: 1. Compute Variable Overhead Spending Variance and label it as favorable or unfavorable. 2. Compute Variable Overhead Efficiency Variance and label it as favorable or unfavorable. 3. Is Variable Overhead over or under allocated and by how much? 4. Prepare the journal entry to record the actual variable overhead (assume all costs went to Accounts Payable). 5. Prepare the journal entry to record the allocated variable overhead. 6. Prepare the journal entry to record the variable overhead variances and to close the Variable Overhead Control account

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