Problem 10A-12 (continued)
Alternative solution:
Budget variance:
Budget Actual fixed Budgeted fixed
= –
variance overhead overhead
= $1,600 U
Volume variance:
æö
÷
ç÷
ç÷
ç÷
ç÷
÷
ç
èø
´
Fixed portion of Standard
Volume Denominator
= the predetermined – hours
Variance hours
overhead rate allowed
= $9.00 per DLH (30,000 DLHs – 36,000 DLHs)
= $54,000 F
Summary of variances:
Variable overhead rate variance …………….
$ 3,800
U
Variable overhead efficiency variance ……..
9,000
U
Fixed overhead budget variance …………….
1,600
U
Fixed overhead volume variance ……………
54,000
F
Overapplied overhead …………………………
$39,600
F
© The McGraw-Hill Companies, Inc., 2015. All rights reserved.
Solutions Manual, Appendix 10B 73
Exercise 10B-1 (20 minutes)
1. The general ledger entry to record the purchase of materials for the
month is:
Raw Materials
(12,000 meters at $3.25 per meter) ………………
39,000
Materials Price Variance
(12,000 meters at $0.10 per meter F) …….
1,200
Accounts Payable
(12,000 meters at $3.15 per meter) ……….
37,800
2. The general ledger entry to record the use of materials for the month is:
Work in Process
(10,000 meters at $3.25 per meter) ………………
32,500
Materials Quantity Variance
(500 meters at $3.25 per meter U) ………………..
1,625
Raw Materials
(10,500 meters at $3.25 per meter) ……….
34,125
3. The general ledger entry to record the incurrence of direct labor cost for
the month is:
Work in Process (2,000 hours at $12.00 per hour)
24,000
Labor Rate Variance
(1,975 hours at $0.20 per hour U) …………………
395
Labor Efficiency Variance
(25 hours at $12.00 per hour F)…………….
300
Wages Payable
(1,975 hours at $12.20 per hour) …………..
24,095
