Cornerstones of Cost Management 4th Ed. - Chapter 4 Scenario II: Goodmark Company produces two types of birthday cards: scented and regular. Goodmark uses the Overhead Control account to accumulate both actual and applied overhead. The company has the following data for the past year:Actual overhead $760,000Sales $3,500,000Materials used $1,100,000Applied Overhead (in each account): Work in process $72,000Finished goods 216,000Cost of goods sold 432,000Required:1.Calculate the overhead variance for the year and label it under- or overapplied. Overhead variance: $ ________ (underpaid or overpaid)2.Assuming the variance is not material, the following closing entry would be made: Debit _________ for $___________ and credit _______ for $ __________3.If the overhead variance is material, indicate how much of the variance would be __________ to each of the following accounts (if an amount is zero, enter "0"): Work in process Materials Cost of goods sold Sales revenue Finished goods

Overhead variance is the difference between actual overhead incurred and applied. Overhead Variance…

Answered: Cornerstones of Cost Management 4th Ed.…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Cornerstones of Cost Management 4th Ed. - Chapter 4

Scenario II: Goodmark Company produces two types of birthday cards: scented and regular. Goodmark uses the Overhead Control account to accumulate both actual and applied overhead. The company has the following data for the past year:

Actual overhead		$760,000
Sales		$3,500,000
Materials used		$1,100,000
Applied Overhead (in each account):
Work in process		$72,000
Finished goods		216,000
Cost of goods sold		432,000

Required:

Calculate the overhead variance for the year and label it under- or overapplied.

Overhead variance: $ ________ (underpaid or overpaid)

Assuming the variance is not material, the following closing entry would be made:

Debit _________ for $___________ and credit _______ for $ __________

If the overhead variance is material, indicate how much of the variance would be __________ to each of the following accounts (if an amount is zero, enter "0"):

Work in process
Materials
Cost of goods sold
Sales revenue
Finished goods

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