Craig Company uses a predetermined overhead rate to assign overhead to jobs. Because Craig's production is machine intensive, overhead is applied on the basis of machine hours. The expected overhead for the year was $5,412,800, and the practical level of activity is 398,000 machine hours.    During the year, Craig used 404,000 machine hours and incurred actual overhead costs of $5,411,400. Craig also had the following balances of applied overhead in its accounts: Work-in-process inventory $ 621,090 Finished goods inventory   627,270 Cost of goods sold   1,841,640 Required: Question Content Area 1. Compute a predetermined overhead rate for Craig. Round your answer to the nearest cent. $fill in the blank 2450b2fed067063_1 per machine hour 2. Compute the overhead variance, and label it as under- or overapplied. $fill in the blank 2450b2fed067063_2       Question Content Area 3. Assuming the overhead variance is immaterial, prepare the journal entry to dispose of the variance at the end of the year. blank                 Question Content Area 4. Assuming the overhead variance is material, prepare the journal entry that appropriately disposes of the overhead variance at the end of the year. If an amount box does not require an entry, leave it blank. blank

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Craig Company uses a predetermined overhead rate to assign overhead to jobs. Because Craig's production is machine intensive, overhead is applied on the basis of machine hours. The expected overhead for the year was $5,412,800, and the practical level of activity is 398,000 machine hours.

   During the year, Craig used 404,000 machine hours and incurred actual overhead costs of $5,411,400. Craig also had the following balances of applied overhead in its accounts:

Work-in-process inventory $ 621,090
Finished goods inventory   627,270
Cost of goods sold   1,841,640

Required:

Question Content Area

1. Compute a predetermined overhead rate for Craig. Round your answer to the nearest cent.

$fill in the blank 2450b2fed067063_1 per machine hour

2. Compute the overhead variance, and label it as under- or overapplied.
$fill in the blank 2450b2fed067063_2  

 
 

Question Content Area

3. Assuming the overhead variance is immaterial, prepare the journal entry to dispose of the variance at the end of the year.

blank
 
   
 
 
   
 

Question Content Area

4. Assuming the overhead variance is material, prepare the journal entry that appropriately disposes of the overhead variance at the end of the year. If an amount box does not require an entry, leave it blank.

blank
 
   
 
 
   
 
 
   
 
 
   
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