Question

Carlson Corporation applies overhead based upon machine-hours. Bufdgeted factory overhead was $226,400 and budgeted machine-hours were 18,500. Actual factory overhead was $287,920 and actual machine-hours were 19,050. Before disposition of over-or underapplied overhead, the cost of good solds was $560,000 and ending inventories were as follows:

250,000

Required:

a. Compute the amount of overhead applied to production.

b. Prepare the journal entry to dispose of the over/under-applied overhead using the write-off to cost of good sold approach.

c. Prepare the journal entry to dispose of the over/under-spplied overhead using the proration approach.

Direct Material

$60,000

Work-in-process

190,000

Finished goods

250,000

Total

$500,000

 

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