Lufti Builds has budgeted construction overhead for August of $260,000 for variable costs and $435,000 for fixed costs. Actual costs for the month totaled $275,000 for variable and $445,000 for fixed. Allocated fixed overhead totaled $440,000. The company tracks each item in an overhead control account before allocations are made to individual jobs. Spending variances for August were $10,000 unfavorable for variable and $10,000 unfavorable for fixed. The production-volume overhead variance was $5,000 favorable.
Required:
a. Make journal entries for the actual costs incurred.
b. Make journal entries to record the variances for August.

Question

Quizplus · Accepted Answer

The Answer of Lufti Builds has budgeted construction overhead for August of $260,000 for variable costs and $435,000 for fixed costs. Actual costs for the month totaled $275,000 for variable and $445,000 for fixed. Allocated fixed overhead totaled $440,000. The company tracks each item in an overhead control account before allocations are made to individual jobs. Spending variances for August were $10,000 unfavorable for variable and $10,000 unfavorable for fixed. The production-volume overhead variance was $5,000 favorable.
Required:
a. Make journal entries for the actual costs incurred.
b. Make journal entries to record the variances for August.

Lufti Builds Has Budgeted Construction Overhead for August of $260,000