Luke's Football Manufacturing Company reported: $\begin{array}{ll}
\text { Actual fixed overhead } & \$ 400,000 \
\text { Fixed manufacturing overhead spending variance } & \$ 10,000 \text { favorable }\
\text { Fixed manufacturing production-volume variance }& \$ 15,000 \text { unfavorable }\

\end{array}$ To isolate these variances at the end of the accounting period,John would debit Fixed Manufacturing Overhead Allocated for ________.

Question

Luke's Football Manufacturing Company reported: $\begin{array}{ll}
\text { Actual fixed overhead } & \$ 400,000 \
\text { Fixed manufacturing overhead spending variance } & \$ 10,000 \text { favorable }\
\text { Fixed manufacturing production-volume variance }& \$ 15,000 \text { unfavorable }\

\end{array}$ To isolate these variances at the end of the accounting period,John would debit Fixed Manufacturing Overhead Allocated for ________.

Quizplus · Accepted Answer

The fixed manufacturing overhead allocated is calculated by adjusting the actual fixed overhead with the spending and production-volume variances. The spending variance is favorable, so it reduces the actual overhead: $400,000 - $10,000 = $390,000. The production-volume variance is unfavorable, so it increases the allocated overhead: $390,000 + $15,000 = $405,000. However, the question asks for the amount to debit, which is the actual overhead minus the spending variance: $400,000 - $10,000 = $390,000. Therefore, the correct debit amount is $395,000.

Luke's Football Manufacturing Company Reported To Isolate These Variances at the End of the Accounting