1. Calculate the overhead variance for the year. $ Provide the appropriate adjusting journal entry to close the overhead variance to Cost of Goods Sold. 2. Assume the variance calculated is material. After prorating, close the variances to the appropriate accounts. If an amount box does not require an entry, leave it blank. Assume the variance calculated s material. After prorating, provide the final ending balances of these accounts. Prorated Overapplied Adjusted Balance Work-in-Process Inventory Finished Goods Inventory Cost of Goods Sold Unadjusted Balance $88,000 $176,000 $176,000 Overhead $ $ $

1. Calculate the overhead variance for the year. $ Provide the appropriate adjusting journal entry to close the overhead variance to Cost of Goods Sold. 2. Assume the variance calculated is material. After prorating, close the variances to the appropriate accounts. If an amount box does not require an entry, leave it blank. Assume the variance calculated s material. After prorating, provide the final ending balances of these accounts. Prorated Overapplied Adjusted Balance Work-in-Process Inventory Finished Goods Inventory Cost of Goods Sold Unadjusted Balance $88,000 $176,000 $176,000 Overhead $ $ $

Name: Overhead Variances and Their DisposalWarner Company has the following
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Description: Overhead Variances and Their DisposalWarner Company has the following data for the past year:Actual overheadApplied overhead:Work-in-process inventoryFinished goods inventoryCost of goods soldTotal$402,000$88,000176,000176,000$440,000Warner uses the

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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Question

Overhead Variances and Their Disposal
Warner Company has the following data for the past year:
Actual overhead
Applied overhead:
Work-in-process inventory
Finished goods inventory
Cost of goods sold
Total
$402,000
$88,000
176,000
176,000
$440,000
Warner uses the overhead control account to accumulate both actual and applied overhead.

1. Calculate the overhead variance for the year.
Provide the appropriate adjusting journal entry to close the overhead variance to Cost of Goods Sold.
2. Assume the variance calculated is material. After prorating, close the variances to the appropriate accounts. If an amount box does not require an entry, leave it blank.
Assume the variance calculated is material. After prorating, provide the final ending balances of these accounts.
Unadjusted Prorated Overapplied
Balance
Adjusted
Balance
Work-in-Process Inventory
Finished Goods Inventory
Cost of Goods Sold
Variance immaterial
$88,000
$176,000
$176,000
Variance material
Overhead
$
3. What if the variance is of the opposite sign calculated in Requirement 1? Provide the appropriate adjusting journal entries for Requirements 1 and 2. For a compound transaction, if an amount box does not require an
entry, leave it blank.
$

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