Question

Mendel Company makes the following journal entry:

Dr. Variable Manufacturing Overhead Allocated= 229,000
Dr. Variable Manufacturing Overhead Efficiency Variance= 7,000
Cr. Variable Manufacturing Overhead Control (Actual)= 179,000
Cr. Variable Manufacturing Overhead Spending Variance= 57,000
Which of the following statements is true of the given journal entry?
A) A favorable flexible-budget variance of $50,000 is recorded.
B) Variable overhead was under-allocated (applied) by $50,000.
C) An unfavorable spending variance of $57.000 is recorded.
D) A favorable efficiency variance of $7,000 is recorded.

Answer 1

The correct statement about the Mendel Company's journal entry is that an unfavorable spending variance of $57,000 is recorded, indicating actual costs were higher than expected.

Step-by-step explanation:

The correct answer to the student's question about the journal entry made by Mendel Company is option C) An unfavorable spending variance of $57,000 is recorded. In this entry, two variances are reported: the efficiency variance and the spending variance. A variance is the difference between what was expected and what actually occurred. The efficiency variance is calculated by comparing the standard cost of the actual quantity of input used to produce an output to the actual cost of that input. A debit to the efficiency variance account means that an unfavorable variance has occurred, indicating that more resources (or higher cost) than expected were used. The spending variance represents the difference between the budgeted cost of variable overhead and the actual cost. A credit to the spending variance account indicates a favorable variance, but because the variance is debited, it implies an unfavorable variance occurred, meaning the actual costs exceeded the budgeted costs. None of the other options accurately describe the entry.