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Time and Again Company makes clocks. The budgeted annual fixed overhead costs for 2017 total...

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Accounting

Time and Again Company makes clocks. The budgeted annual fixed overhead costs for 2017 total $720,000. Assume the fixed cost is spread evenly throughout the year. The company uses direct labor-hours for fixed overhead allcocaton and anticipates 240,0000 hours during the year for 480,000 units. an equal number of units are budgeted for each month. During June, 43,000 clocks were produced and $63,000 was spent on fixed overhead.

Fixed overhead rate for the driver for 2017 is $3 (720,000/240,000) Amount of time required to complete one clock is 0.5 hours (240,000/480,000) Standard fixed cost for one unit of output is $1.50 ($3)*(0.5)

1. Compute the fixed manufacturing overhead variances

2. Identify whether the variances are favorable or unfavorable

3. Prepare the journal entry to capture the fixed manufacturing overhead variances for June 2017.

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