Predetermined Overhead Rate, Overhead Variances, Journal Entries

Craig Company uses a predetermined overhead rate to assign overhead to jobs. Because Craig's production is machine intensive, overhead is applied on the basis of machine hours. The expected overhead for the year was $6,461,400, and the practical level of activity is 363,000 machine hours.

During the year, Craig used 369,500 machine hours and incurred actual overhead costs of $6,502,100. Craig also had the following balances of applied overhead in its accounts:

Work-in-process inventory	$	551,850
Finished goods inventory		571,660
Cost of goods sold		1,706,490

4. Assuming the overhead variance is material, prepare the journal entry that appropriately disposes of the overhead variance at the end of the year. If an amount box does not require an entry, leave it blank.

	Cost of goods sold
	Work-in-process inventory
	Finished goods inventory
			???????????????