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Predetermined Overhead Rate, Overhead Variances, Journal Entries Craig Company uses a predetermined overhead rate to assign overhead to...

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Accounting

Predetermined Overhead Rate, Overhead Variances, JournalEntries

Craig Company uses a predetermined overhead rate to assignoverhead to jobs. Because Craig's production is machine intensive,overhead is applied on the basis of machine hours. The expectedoverhead for the year was $6,461,400, and the practical level ofactivity is 363,000 machine hours.

   During the year, Craig used 369,500 machinehours and incurred actual overhead costs of $6,502,100. Craig alsohad the following balances of applied overhead in its accounts:

Work-in-process inventory$551,850
Finished goods inventory571,660
Cost of goods sold1,706,490

4. Assuming the overhead variance is material,prepare the journal entry that appropriately disposes of theoverhead variance at the end of the year. If an amount box does notrequire an entry, leave it blank.

Cost of goods sold
Work-in-process inventory
Finished goods inventory
???????????????

Answer & Explanation Solved by verified expert
3.9 Ratings (543 Votes)
To be able to pass the journal entry we need to first calculate whether there is an under or over application of overheads This can be done by the user of a predetermined overhead rate Predetermined overhead ratePOHR estimated overheadestimated machine    See Answer
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