Schulz Corporation applies overhead based upon machine-hours. Budgeted factory overhead was $266,400 and budgeted machine-hours were 18,500. Actual factory overhead was $287,920 and actual machine-hours were 19,050. Before disposition of under/overapplied overhead, the cost of goods sold was $560,000 and ending inventories were as follows:

Required:
a.Determine the budgeted factory overhead rate per machine-hour.
b.Compute the over/underapplied overhead.
c.Prepare the journal entry to dispose of the variance using the write-off to cost of goods sold approach.
d.Prepare the journal entry to dispose of the variance using the proration approach.

Question

Schulz Corporation applies overhead based upon machine-hours. Budgeted factory overhead was $266,400 and budgeted machine-hours were 18,500. Actual factory overhead was $287,920 and actual machine-hours were 19,050. Before disposition of under/overapplied overhead, the cost of goods sold was $560,000 and ending inventories were as follows:
  
Required:
a.Determine the budgeted factory overhead rate per machine-hour.
b.Compute the over/underapplied overhead.
c.Prepare the journal entry to dispose of the variance using the write-off to cost of goods sold approach.
d.Prepare the journal entry to dispose of the variance using the proration approach.

Quizplus · Accepted Answer

The Answer of Schulz Corporation applies overhead based upon machine-hours. Budgeted factory overhead was $266,400 and budgeted machine-hours were 18,500. Actual factory overhead was $287,920 and actual machine-hours were 19,050. Before disposition of under/overapplied overhead, the cost of goods sold was $560,000 and ending inventories were as follows:
  
Required:
a.Determine the budgeted factory overhead rate per machine-hour.
b.Compute the over/underapplied overhead.
c.Prepare the journal entry to dispose of the variance using the write-off to cost of goods sold approach.
d.Prepare the journal entry to dispose of the variance using the proration approach.

Schulz Corporation Applies Overhead Based Upon Machine-Hours