Overhead Variances and Their Disposal

Warner Company has the following data for the past year:

Actual overhead	$263,500
Applied overhead:
Work-in-process inventory	$60,000
Finished goods inventory	120,000
Cost of goods sold	120,000
Total	$300,000

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

Required:

1. Calculate the overhead variance for the year. $fill in the blank 82291eff1fcfff3_1 Overapplied

Feedback

Partially correct

Provide the appropriate adjusting journal entry to close the overhead variance to Cost of Goods Sold.

	Overhead Control	fill in the blank 301d94045f9700f_2
	Cost of Goods Sold		fill in the blank 301d94045f9700f_4

Feedback

Actual OH - Applied OH = Over/Underapplied. If variance is not material, it is closed out to cost of goods sold.

2. Assume the variance calculated is material. After prorating, close the variances to the appropriate accounts. If an amount box does not require an entry, leave it blank.

	Overhead Control	fill in the blank 58f4ffff2025fcc_2	fill in the blank 58f4ffff2025fcc_3
	Cost of Goods Sold	fill in the blank 58f4ffff2025fcc_5	fill in the blank 58f4ffff2025fcc_6
	Work-in-Process Inventory	fill in the blank 58f4ffff2025fcc_8	fill in the blank 58f4ffff2025fcc_9
	Finished Goods Inventory	fill in the blank 58f4ffff2025fcc_11	fill in the blank 58f4ffff2025fcc_12

Feedback

Partially correct

Assume the variance calculated is material. After prorating, provide the final ending balances of these accounts.

	Unadjusted Balance		Prorated Overapplied Overhead		Adjusted Balance
Work-in-Process Inventory	$60,000		$fill in the blank 39429a096faa057_1		$fill in the blank 39429a096faa057_2
Finished Goods Inventory	$120,000		$fill in the blank 39429a096faa057_3		$fill in the blank 39429a096faa057_4
Cost of Goods Sold	$120,000		$fill in the blank 39429a096faa057_5		$fill in the blank 39429a096faa057_6

Feedback

If variance is material, it is prorated among Work in Process, Finished Goods, and Cost of Goods Sold.

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. For a compound transaction, if an amount box does not require an entry, leave it blank.

Variance immaterial	Cost of Goods Sold	fill in the blank c4ff00018039008_2
	Overhead Control		fill in the blank c4ff00018039008_4
Variance material	Cost of Goods Sold	fill in the blank c4ff00018039008_6	fill in the blank c4ff00018039008_7
	Work-in-Process Inventory	fill in the blank c4ff00018039008_9	fill in the blank c4ff00018039008_10
	Finished Goods Inventory	fill in the blank c4ff00018039008_12	fill in the blank c4ff00018039008_13
	Overhead Control	fill in the blank c4ff00018039008_15	fill in the blank c4ff00018039008_16