Overhead Variances, Four-Variance Analysis, Journal Entries Laughlin, Inc., uses a standard costing system. The predetermined overhead rates are calculated using practical capacity. Practical capacity for a year is defined as 1,000,000 units requiring 200,000 standard direct labor hours. Budgeted overhead for the year is $750,000, of which $300,000 is fixed overhead. During the year, 900,000 units were produced using 190,000 direct labor hours. Actual annual overhead costs totaled $800,000, of which $294,700 is fixed overhead. Required:
Fixed Overhead Spending Variance 5,300 Favorable
Fixed Overhead Volume Variance 30,000 Unfavorable
Variable Overhead Spending Variance 77,800 Unfavorable
Variable Overhead Efficiency Variance 22,500 Unfavorable
Prepare the journal entries that reflect the following:
Assignment of overhead to production
Recognition of the incurrence of actual overhead
Recognition of overhead variances
Closing out overhead variances, assuming they are not material
Note: Close the variances with a debit balance first. For compound entries, if an amount box does not require an entry, leave it blank or enter "0".