Make journal entries when the overhead costs are incurred

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Reference no: EM132797096

The division of American Auto Company uses standard costing system for its production of airbags. Accounting records from the most recent month are given below:

Actual variable manufacturing overhead costs incurred $585,235
Budgeted variable manufacturing overhead cost rate $7.10Per machine hour
Actual fixed manufacturing overhead costs incurred $148,925
Budgeted fixed manufacturing overhead costs $147,000
Budgeted machine hours for the period 70,000
Budgeted machine hours allowed for per unit of output 1.50Machine hours
Units of output produced during the month 55,000
Actual machine hours used during the month 80,500

Required:

problem a) Calculate the overhead variances for both fixed and variable overhead costs.

problem b) Prepare journal entries when the overhead costs are incurred and applied to WIP. Also present journal entries for recognizing OH cost variances.

problem c) Prepare journal entries for disposing off the overhead cost variances.

Reference no: EM132797096

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