Klink Corporation applies overhead based upon machine-hours. Budgeted factory overhead was $295,400 and budgeted machine-hours were 21,100. Actual factory overhead was $319,800 and actual machine-hours were 18,090. Before disposition of under/overallocated overhead, the following information was available:

Required:
a. Determine the budgeted factory overhead rate per machine-hour.
b. Compute the over/underallocated 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

Klink Corporation applies overhead based upon machine-hours. Budgeted factory overhead was $295,400 and budgeted machine-hours were 21,100. Actual factory overhead was $319,800 and actual machine-hours were 18,090. Before disposition of under/overallocated overhead, the following information was available:

Required:
a. Determine the budgeted factory overhead rate per machine-hour.
b. Compute the over/underallocated 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 Klink Corporation applies overhead based upon machine-hours. Budgeted factory overhead was $295,400 and budgeted machine-hours were 21,100. Actual factory overhead was $319,800 and actual machine-hours were 18,090. Before disposition of under/overallocated overhead, the following information was available:

Required:
a. Determine the budgeted factory overhead rate per machine-hour.
b. Compute the over/underallocated 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.

Klink Corporation Applies Overhead Based Upon Machine-Hours