Sanford Company applies overhead based upon machine hours. Budgeted factory overhead was $532,800 and budgeted machine hours were 37,000. Actual factory overhead was $575,840 and actual machine hours were 38,100. Before disposition of under/overapplied overhead, the cost of goods sold was $1,120,000 and ending inventories were as follows: Required:
a. Determine the budgeted factory-overhead rate per machine hour.
b. Compute the over/underapplied overhead.
c. Assuming the variance is immaterial, give the journal entry to dispose of the variance.
d. Assuming the variance is material, give the journal entry to dispose of the variance using proration.

Question

Sanford Company applies overhead based upon machine hours. Budgeted factory overhead was $532,800 and budgeted machine hours were 37,000. Actual factory overhead was $575,840 and actual machine hours were 38,100. Before disposition of under/overapplied overhead, the cost of goods sold was $1,120,000 and ending inventories were as follows:  Required:
a. Determine the budgeted factory-overhead rate per machine hour.
b. Compute the over/underapplied overhead.
c. Assuming the variance is immaterial, give the journal entry to dispose of the variance.
d. Assuming the variance is material, give the journal entry to dispose of the variance using proration.

Quizplus · Accepted Answer

The Answer of Sanford Company applies overhead based upon machine hours. Budgeted factory overhead was $532,800 and budgeted machine hours were 37,000. Actual factory overhead was $575,840 and actual machine hours were 38,100. Before disposition of under/overapplied overhead, the cost of goods sold was $1,120,000 and ending inventories were as follows:  Required:
a. Determine the budgeted factory-overhead rate per machine hour.
b. Compute the over/underapplied overhead.
c. Assuming the variance is immaterial, give the journal entry to dispose of the variance.
d. Assuming the variance is material, give the journal entry to dispose of the variance using proration.

Sanford Company Applies Overhead Based Upon Machine Hours