How to prepare the journal entry to dispose of the variance

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Reference no: EM132571555

Budgeted factory overhead of SOLANO Corp. was $399,600 and the budgeted machine-hours were 27,750. Actual factory overhead was $431,880 and actual machine-hours were 28,575. Solano Corporation applies overhead based upon machine-hours.

Before disposition of under/overapplied overhead, the cost of goods sold was $840,000 and ending inventories were as follows:

Direct materials              $ 90,000

WIP                                285,000

Finished goods                    375,000

Total                               $750,000

Required:

Question a. Determine the budgeted factory overhead rate per machine-hour.

Question b. Compute the over/underapplied overhead.

Question c. Prepare the journal entry to dispose of the variance using the write-off to cost of goods sold approach.

Reference no: EM132571555

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