Gateshead Industries manufactures a single product and started the year with no inventories. Selected information about results for the period just ended include the following:
Actual fixed manufacturing overhead $
Actual variable manufacturing overhead
Applied fixed manufacturing overhead
Applied variable manufacturing overhead
Budgeted fixed overhead
Variable overhead efficiency variance U
Thirty percent of this period's production has not been sold. There are never any workinprocess inventories.
Required:
a Assume Gateshead writes off all variances to Cost of Goods Sold. Prepare the entries the company would make to record and close out the variances.
b Assume Gateshead prorates all variances to the appropriate accounts. Prepare the entries the company would make to record and close out the variances.
