Reference no: EM132053269

Decoration Inc. evaluates manufacturing overhead in its flowerpot factory using the four variances. Manufacturing overhead is applied on the basis of direct labour hours. The company's fiscal period runs from January to December and the following information for the year is provided:

Budgeted data Actual data

Output units 140,000 flowerpots or 28,000 hours 150,000 flowerpots

Direct manufacturing labour hour per unit of output 0.2 hours per flowerpot -

Direct manufacturing hours used - 40,000 hours

Variable manufacturing overhead $1.50 per direct labour hour $55,000 (incurred in total)

Fixed manufacturing overhead $112,000 $120,000 (incurred in total)

Required: 

1. Calculate the two variable and two fixed manufacturing overhead variances for the year.
2. Give journal entries for both variable and fixed overhead variances.