Briefly describe the effect on financial statements

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Reference no: EM131881420

Question: 1) Carlson Corporation applies overhead based upon Machine-hours. The amount of overhead applied to production is $274,320. Actual factory overhead was $287,920. Before disposition of over- or under applied overhead, the cost of gods sold was $560,000 and ending inventories were as follows:

Direct Materials: $60000

Work in Process: $190000

Finished Goods: $250000

Total: $500000

a) Prepare the journal entry to dispose of the over/under-applied overhead using the write- off to cost of goods sold approach

b) Prepare the journal entry to dispose of the over/under applied overhead using the proration approach.

c) Briefly describe the effect on financial statements and why?

Note: Please use manufacturing overhead control and manufacturing overhead applied accounts to prepare the journal entry.

Reference no: EM131881420

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