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:
$\begin{array}{ll}
\text { Direct materials } & \$ 60,000 \
\text { WIP } & 190,000 \
\text { Finished goods } & \underline{250,000} \
\quad \text { Total } & \$ 500,000
\end{array}$
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:
 $\begin{array}{ll}
\text { Direct materials } & \$ 60,000 \
\text { WIP } & 190,000 \
\text { Finished goods } & \underline{250,000} \
\quad \text { Total } & \$ 500,000
\end{array}$ 
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:
 $\begin{array}{ll}
\text { Direct materials } & \$ 60,000 \
\text { WIP } & 190,000 \
\text { Finished goods } & \underline{250,000} \
\quad \text { Total } & \$ 500,000
\end{array}$ 
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 Required: A

Schulz Corporation Applies Overhead Based Upon Machine-Hours Required:
A