Gibson Homes Has Allocated Budgeted Construction Overhead for August of $260,000

Essay

Gibson Homes has allocated budgeted construction overhead for August of $260,000 for variable costs and $440,000 for fixed costs. Actual costs for the month totalled $275,000 for variable and $445,000 for fixed. Allocated fixed overhead totalled $440,000. The company tracks each item in an overhead control account before allocations are made to individual jobs. Rate variances for August were $10,000 unfavourable for variable and $10,000 unfavourable for fixed. The production volume overhead variance was $5,000 favourable.
Required:
a. Prepare journal entries for the actual costs incurred.
b. Prepare journal entries to record the variances for August.