Actual overhead Applied overhead: Work-in-process inventory Finished goods inventory Cost of goods sold $100,000 200,000 200,000 $500,000 Total Warner uses the overhead control account to accumulate both actual and applied overhead. Required: 1. Calculate the overhead variance for the year and close it to cost of goods sold. 2. Assume the variance calculated is material. After prorating, close the variances to the appropriate accounts and provide the final ending balances of these accounts. 3. What if the variance is of the opposite sign calculated in Requirement 1? Provide the appro- priate adjusting journal entries for Requirements 1 and 2.
Actual overhead Applied overhead: Work-in-process inventory Finished goods inventory Cost of goods sold $100,000 200,000 200,000 $500,000 Total Warner uses the overhead control account to accumulate both actual and applied overhead. Required: 1. Calculate the overhead variance for the year and close it to cost of goods sold. 2. Assume the variance calculated is material. After prorating, close the variances to the appropriate accounts and provide the final ending balances of these accounts. 3. What if the variance is of the opposite sign calculated in Requirement 1? Provide the appro- priate adjusting journal entries for Requirements 1 and 2.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 2CE: Warner Company has the following data for the past year: Warner uses the overhead control account to...
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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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![Actual overhead
Applied overhead:
Work-in-process inventory
Finished goods inventory
Cost of goods sold
$100,000
200,000
200,000
$500,000
Total
Warner uses the overhead control account to accumulate both actual and applied overhead.
Required:
1. Calculate the overhead variance for the year and close it to cost of goods sold.
2. Assume the variance calculated is material. After prorating, close the variances to the
appropriate accounts and provide the final ending balances of these accounts.
3. What if the variance is of the opposite sign calculated in Requirement 1? Provide the appro-
priate adjusting journal entries for Requirements 1 and 2.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F368bbbc7-b69b-4000-920e-0644cc42ea1d%2F1b1b5458-d6e9-441c-a37f-0e0f9c6651cd%2Fykwwm1k.jpeg&w=3840&q=75)
Transcribed Image Text:Actual overhead
Applied overhead:
Work-in-process inventory
Finished goods inventory
Cost of goods sold
$100,000
200,000
200,000
$500,000
Total
Warner uses the overhead control account to accumulate both actual and applied overhead.
Required:
1. Calculate the overhead variance for the year and close it to cost of goods sold.
2. Assume the variance calculated is material. After prorating, close the variances to the
appropriate accounts and provide the final ending balances of these accounts.
3. What if the variance is of the opposite sign calculated in Requirement 1? Provide the appro-
priate adjusting journal entries for Requirements 1 and 2.
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