Reference no: EM132833498

Question - Decibel Max, Inc. manufactures amplifiers for concerts and applies manufacturing overhead costs to production at an estimated overhead rate of $51 per direct labor hour. The following data are obtained from the general ledger for January 2021 actual activity.

Factory supervisor salaries: $38,500

Wood cabinets for amplifiers (purchase cost): $140,000

Direct labor (35,00 hours @ $28/hour): $98,000

Indirect materials: $6,000

Factory insurance: $8,000

Advertising costs for TV ads: $65,000

Depreciation on factory building: $73,000

A) Calculate the manufacturing overhead applied to all jobs during January 2021.

B) For January 2021, calculate the variance between the actual overhead spending and the total manufacturing overhead that was applied to production. Has overhead been over applied, or under applied?

C) Write the journal entry to account for the overhead variance, assuming all overhead variances are written off to cost of goods sold.