FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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:

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    
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