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Example: To continue the example, assume XYZ Company incurred $180,000 of manufacturing expenses and that actual machine hours were 25,000. 1. Calculate the actual overhead rate based on machine hours. 2. Assume the variance is not material to XYZ Company. What journal entry would be made? 3. Assume the variance is material and that the applied overhead included in the ending balances in the work-in-process, finished goods, and cost of goods sold account is $50,000, $100,000, and $350,000, respectively. What amount of variance should be allocated to cost of goods sold?

Example: To continue the example, assume XYZ Company incurred $180,000 of manufacturing expenses and that actual machine hours were 25,000. 1. Calculate the actual overhead rate based on machine hours. 2. Assume the variance is not material to XYZ Company. What journal entry would be made? 3. Assume the variance is material and that the applied overhead included in the ending balances in the work-in-process, finished goods, and cost of goods sold account is $50,000, $100,000, and $350,000, respectively. What amount of variance should be allocated to cost of goods sold?

Principles of Cost Accounting
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter8: Standard Cost Accounting—materials, Labor, And Factory Overhead
Section: Chapter Questions
Problem 12P: The standard specifications for an electric motor manufactured by XYZ Electric Co. follow: Factory...
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Example: To continue the example, assume XYZ Company incurred $180,000 of manufacturing expenses and that actual machine hours were 25,000. 1. Calculate the actual overhead rate based on machine hours. 2. Assume the variance is not material to XYZ Company. What journal entry would be made? 3. Assume the variance is material and that the applied overhead included in the ending balances in the work-in-process, finished goods, and cost of goods sold account is $50,000, $100,000, and $350,000, respectively. What amount of variance should be allocated to cost of goods sold?
Transcribed Image Text:Example: To continue the example, assume XYZ Company incurred $180,000 of manufacturing expenses and that actual machine hours were 25,000. 1. Calculate the actual overhead rate based on machine hours. 2. Assume the variance is not material to XYZ Company. What journal entry would be made? 3. Assume the variance is material and that the applied overhead included in the ending balances in the work-in-process, finished goods, and cost of goods sold account is $50,000, $100,000, and $350,000, respectively. What amount of variance should be allocated to cost of goods sold?
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