At year-end, the company's overhead T account showed the following:
Kennedy Company uses a job order costing system with overhead applied to units
using a predetermined rate based on direct labor hours. At the beginning of the year, the company developed a predetermined rate with the following information:

Required:
a) Determine the actual direct labor hours incurred
b) Determine the overhead variance. Calculate the separate components of the overhead variance.
c) What are the possible treatments of the overhead variance at year-end?

Question

At year-end, the company's overhead T account showed the following:
  Kennedy Company uses a job order costing system with overhead applied to units
using a predetermined rate based on direct labor hours. At the beginning of the year, the company developed a predetermined rate with the following information:
 
Required:
a) Determine the actual direct labor hours incurred
b) Determine the overhead variance. Calculate the separate components of the overhead variance.
c) What are the possible treatments of the overhead variance at year-end?

Quizplus · Accepted Answer

The Answer of At year-end, the company's overhead T account showed the following:
  Kennedy Company uses a job order costing system with overhead applied to units
using a predetermined rate based on direct labor hours. At the beginning of the year, the company developed a predetermined rate with the following information:
 
Required:
a) Determine the actual direct labor hours incurred
b) Determine the overhead variance. Calculate the separate components of the overhead variance.
c) What are the possible treatments of the overhead variance at year-end?

At Year-End, the Company's Overhead T Account Showed the Following