Reference no: EM132792786

Kardesh 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 $537,470

Budgeted variable manufacturing overhead cost rate $7.00Per machine hour

Actual fixed manufacturing overhead costs incurred $146,101

Budgeted fixed manufacutring overhead costs $136,000

Budgeted machine hours for the period 68,000

Budgeted machine hours allowed for per unit of output 1.20

Machine hours Units of output produced during the month 66,500

Actual machine hours used during the month 75,700

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) Preapre journal entries for disposing off the overhead cost variances.