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Linus Inc. has budgeted overhead for August of $260,000 for variable costs and $435,000 for fixed costs. Actual costs for month totaled $275,000 for variable (all Accounts Payable) and $445,000 for fixed (all Accumulated Depreciation). Allocated fixed overhead totaled $440,000. The company tracks every item in an overhead control account before allocations are made to individual jobs. Spending variances for August were $10,000 unfavorable for variable and $10,000 unfavorable for fixed. The production-volume overhead variance was $5,000 favorable.
Required:
a. Construct two journal entries for actual costs incurred - one for variable overhead and one for fixed overhead.
b. Construct two journal entries to record variances for August - one for variable overhead and one for fixed overhead.
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