Author Question: A debit signifies a decrease in a. assets b. expenses c. drawing d. ... (Read 54 times)

hubes95 · **on:** Jul 5, 2018

A debit signifies a decrease in
a. assets
b. expenses
c. drawing
d. revenues

Question 2

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:

Direct materials 60,000
WIP 190,000
Finished goods 250,000
Total 500,000

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.

quynhmickitran · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

d

Answer to Question 2

Answer:
a. 266,400/18,500 hrs. = 14.40 per hour

b. 14.40 19,050 hours = 274,320 - 287,920 = 13,600 underapplied overhead

c. Cost of Goods Sold 13,600
Factory Department Overhead Control 13,600

d. 560,000 + 190,000 + 250,000 = 1,000,000

Cost of Goods Sold:
560,000/1,000,000 = 56 13,600 = 7,616

WIP:
190,000/1,000,000 = 19 13,600 = 2,584

Finished Goods:
250,000/1,000,000 = 25 13,600 = 3,400

Cost of Goods Sold 7,616
WIP Inventory 2,584
Finished Goods Inventory 3,400
Factory Department Overhead Control 13,600