Klink Corporation applies overhead based upon machine-hours. Budgeted factory overhead was $295,400 and budgeted machine-hours were 21,100. Actual factory overhead was $319,800 and actual machine-hours were 18,090. Before disposition of under/overallocated overhead, the following information was available: Account Overhead Balance Allocated $nil Direct materials $50,000 WIP $160,000 $49,500 Finished goods $220,000 $70,000 Cost of goods sold $510,000 $173,900 Required: a. Determine the budgeted factory overhead rate per machine-hour. b. Compute the over/underallocated overhead. C. Prepare the journal entry to dispose of the variance using the write-off to cost of goods sold approach. The corporation uses Manufacturing Overhead Allocated and Manufacturing Overhead control accounts. ariance usinge the proration approach.

Klink Corporation applies overhead based upon machine-hours. Budgeted factory overhead was $295,400 and budgeted machine-hours were 21,100. Actual factory overhead was $319,800 and actual machine-hours were 18,090. Before disposition of under/overallocated overhead, the following information was available: Account Overhead Balance Allocated $nil Direct materials $50,000 WIP $160,000 $49,500 Finished goods $220,000 $70,000 Cost of goods sold $510,000 $173,900 Required: a. Determine the budgeted factory overhead rate per machine-hour. b. Compute the over/underallocated overhead. C. Prepare the journal entry to dispose of the variance using the write-off to cost of goods sold approach. The corporation uses Manufacturing Overhead Allocated and Manufacturing Overhead control accounts. ariance usinge the proration approach.

Name: Klink Corporation applies overhead based upon machine-hours. Budgeted
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Description: Klink Corporation applies overhead based upon machine-hours. Budgeted factory overheadwas $295,400 and budgeted machine-hours were 21,100. Actual factory overhead was $319.800and actual machine-hours were 18,090. Before disposition of under/overallo

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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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

Klink Corporation applies overhead based upon machine-hours. Budgeted factory overhead
was $295,400 and budgeted machine-hours were 21,100. Actual factory overhead was $319.800
and actual machine-hours were 18,090. Before disposition of under/overallocated overhead,
the following information was available:
Account Overhead
Balance
Allocated
Direct materials
$50,000
$nil
WIP
$160,000
$49,500
Finished goods
$220,000
$70,000
$173,900
Cost of goods sold $510,000
Required:
a. Determine the budgeted factory overhead rate per machine-hour.
b. Compute the over/underallocated overhead.
C. Prepare the Journal entry to dispose of the varlance using the write-off to cost of goods sold
approach. The corporation uses Manufacturing Overhead Allocated and Manufacturing
Overhead control accounts.
d. Prepare the journal entry to dispose of the variance using the proration approach.
e. dentify three value chain categorles and provide an example for each on how Klink
Corporation could reduce its indirect costs.

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