Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher

Exercise 24

(Appendix used in Part c) Comprehensive Cost Variance Analysis
Wagner, Inc., manufactures truck tires. The following information is available for the last operating period.
•Wagner produced and sold 46,000 tires for $80 each. Budgeted production was 50,000 tires.
•Standard variable costs per tire follow:

•Fixed production overhead costs:

•Fixed overhead is applied at the rate of $27.00 per tire.
•Actual production costs:

Required
a. Prepare a cost variance analysis for each variable cost for Wagner.
b. Prepare a fixed overhead cost variance analysis.
c. Prepare the journal entries to record the activity for the last period. Assume that all variances are closed to Cost of Goods Sold at the end of the operating period.