Indooroopilly Corporation Applies Overhead Based Upon Machine-Hours Required
A

Essay

Indooroopilly Corporation applies overhead based upon machine-hours.Budgeted factory overhead was $266 400 and budgeted machine-hours were 18 500.Actual factory overhead was $287 920 and actual machine-hours were 19 050.Before disposition of under/overapplied overhead,the cost of goods sold was $560 000 and ending inventories were as follows:
$$\begin{array} { l r } \text { Direct materials } & \$ 60000 \\\text { WIP } & 190000 \\\text { Finished goods } & \underline { 250000 } \\\text { Total } & \underline { \$ 500000}\end{array}$$
Required
a.Determine the budgeted factory overhead rate per machine-hour.
b.Compute the over/underapplied overhead.
c.Prepare the journal entry to dispose of the variance using the write-off to cost of goods sold approach.
d.Prepare the journal entry to dispose of the variance using the proration approach.
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