Chapter 4, Problem 2CE

Warner Company has the following data for the past year:

Warner uses the overhead control account to accumulate both actual and applied overhead.

Required:

1. 1. Calculate the overhead variance for the year and close it to cost of goods sold.
2. 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. 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.