Actual
Results
Flexible-Budget
Amount
Static-Budget
Amount
1. Output units (food processors)
650
650
588
2. Machine-hours
1,170
1,950
1,764
3. Machine-hours per output unit
1.80
3.00
3.00
4. Variable MOH costs
$51,480
$79,950
$72,324
5. Variable MOH costs per machine-
hour (Row 4 ÷ Row 2)
$44.00
$41.00
$41.00
6. Variable MOH costs per unit
(Row 4 ÷ Row 1)
$79.20
$123.00
$123.00
7. Fixed MOH costs
$350,210
$343,980
$343,980
8. Fixed MOH costs per machine-
hour (Row 7 ÷ Row 2)
$299.32
$176.40
$195.00
9. Fixed MOH costs per unit (Row 7 ÷
Row 1)
$538.78
$529.20
$585.00
Solution Exhibit 8-31 shows the computation of the variances.
Journal entries for variable MOH, year ended December 31, 2014:
Variable MOH Control
51,480
Accounts Payable Control and Other Accounts
51,480
Work-in-Process Control
79,950
Variable MOH Allocated
79,950
Variable MOH Allocated
79,950
Variable MOH Spending Variance
3,510
Variable MOH Control
31,980
Variable MOH Efficiency Variance
51,480
Journal entries for fixed MOH, year ended December 31, 2014:
Fixed MOH Control
350,210
Wages Payable, Accumulated Depreciation, etc.
350,210
Work-in-Process Control
380,250
Fixed MOH Allocated
380,250
Fixed MOH Allocated
380,250
Fixed MOH Spending Variance
6,230
Fixed MOH Control
350,210
Fixed MOH Production-Volume Variance
36,270
2. Adjustment of COGS
Variable MOH Efficiency Variance
31,980
Fixed MOH Production-Volume Variance
36,270
Variable MOH Spending Variance
3,510
Fixed MOH Spending Variance
6,230
Cost of Goods Sold
58,510
Graph for planning
and control purpose
Graph for inventory
costing purpose
($17 per machine-hour)
Fixed Manufacturing Overhead Costs
* Budgeted fixed manufacturing
overhead rate per hour = Budgeted fixed manufacturing overhead
Denominator level
= $17,000,000/ 1,000,000 machine hours
= $17 per machine-hour
Total
Fixed
Manuf.
Overhead
Costs
$17,000,000
$8,500,000
1,000,000
Machine-Hours
