Journal entries

Date particulars                Debit Credit

2 Aug Direct materials …. 158400

Delivery cost … 1584

To Accounts payable        159984

(To direct materials purchased on credit)

3 Aug Factory overhead invoices 1650

To Account payables 1650

(To factory overhead charged in credit)

8 Aug Factory wages … 50000

To Bank 50000

(To wages being paid and allocated)

10 Aug Work-in-progress A/c 108200

To Direct materials 108200

(To direct materials used in production)

12 Aug Direct Materials 139464

To accounts payable 139464

(To direct materials purchase on credit)

15 Aug Accounts receivables 17600

To factory cleaning overhead 17600

(To factory cleaning invoices received in credit)

18 Aug Accounts payable 11970

To Direct materials 11970

(To material purchased on 12 Aug has been returned)

22 Aug factory wages 60000

To Bank 60000

(To wages being paid and allocated)

24 Aug Work-in-progress 122734

To Direct materials 122734

(To materials used in production on the FIFO basis)

28 Aug Accounts receivables 13200

To Advertising 13200

(To advertising account received on credit)

31 Aug Finished goods 316747.2

To work-in-progress 316747.2

(To 80% of the work-in-progress is finished)

31 Aug Accounts receivables 537701

To sales 537701

(To credit sale with a markup of 40% above cost on 90% of the goods in store)

Overhead Variance Report

Overheads Variance Report
	Standard	Actual	Variance
Depreciation	100000	270000	170000.00
Factory overhead	36546.00	45540	8994.00

Overhead Variance can be understood as the difference between the standard cost of overhead allowed for the actual output accomplished and actual cost incurred over the overheads.

The variation has been derived in the depreciation comparing the standard or depreciation of the previous years over the depreciation in the current year. While the actual factory overhead has been derived taking $4 a unit of the total units used in production.