2. 23 points) Everjoice Company makes clocks. The fixed annual budget overhead c
ID: 2549502 • Letter: 2
Question
2. 23 points) Everjoice Company makes clocks. The fixed annual budget overhead costs for 2018 total s720,000. 1 be company uses direct labor-hours for fixed overhead allocation and anticipates 240,000 hours during the An equal number of units are budgeted for each month. year for 480,000 units. e points) Determine the annual fixed: (Show your work immediately to the right of responses to earn points) .Quantity of driver per clock: .Overhead rate per driver: . Fixed cost per unit: (10 points) During June 2018, 43,000 clocks were produced and $63,000 were spent on fixed overhead. Compute the respective fixed manufacturing overhead variance(s). Show your work, neatly! Circle: F UF Variance name o Variance name: Variance amount: Variance amount: Circle: F UF (12 points) Capture the respective variance(s) with journal entries and close to cost of goods sold.Explanation / Answer
Fixed Annual Budgeted OH Cost = 720000
Total DLH in year Budgeted = 240000 Hours
Total Production in Year = 480000 Units
Budgeted Monthly Production = 480000 / 12 = 40000 Units
Budgeted Monthly Overheads = 720000 / 12 = 60000
Actual Production = 43000 Units
Actual Fixed OH = 63000
Quantity of driver per clock = Total DLH / Total Clock = 240000 / 480000 = 0.50 Hours
OH Rate per driver = Total FOH / Total DLH = 720000 / 240000 = 3
FOH per unit = DLH per clock x rate = 0.50 x 3 = 1.50 per unit
Fixed overhead cost variance = (Actual production x Std FOH per unit ) - (Total actual FOH)
= (43000 x 1.5) -(63000)
= 64500 - 63000 = 1500 (F)
Fixed OH Budget variance = Budgeted FOH - Actual FOH
= 60000 - 63000 = 3000 (UF)
Fixed OH Volume variance = Std rate of OH ( AQ - BQ)
= 1.50 (43000 - 40000)
= 4500 (F)
Journal Entries
1. FOH Volume Variance 4500
FOH Budget Variance 3000
FOH Cost Variance 1500
2. FOH Cost Variance 1500
Cost of goods sold 1500
so above is the solution to problem
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