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Question - Riverside company budgeted FMOH costs at $15.00 per direct manufacturing labour hour. Each unit takes 4.5 of labour hours to produce. The company budgets to produce 18,000 units but actually produces 19,500 units. The actual total spend is $1,500,000.
Required -
a) Prepare an analysis of the FMOH variances; calculate the rate variance and the production volume variance.
b) Prepare the journal entries for recognizing actual costs, the rate variance, the production volume variance and the under or overallocated FMOH costs.
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