Reference no: EM131774478
Question - McDougal Company uses a predetermined overhead rate to assign overhead to jobs. Because McDougal's production is machine intensive, overhead is applied on the basis of machine hours. The expected overhead for the year was $2.8 million, and the practical level of activity is 250,000 machine hours.
During the year, McDougal used 255,000 machine hours and incurred actual overhead costs of $2.82 million. McDougal also had the following balances of applied overhead in its accounts
Work in process inventory $192,000
Finished goods inventory 208,000
Cost of goods sold 600,000
1. Compute a predetermined overhead rate for McDougal
2. Compute the overhead variance, and label it as under or over applied
3. Assuming the overhead variance is in material; prepare the journal entry to dispose of the variance at the end of the year
4. Assuming the overhead variance is material; prepare the journal entry that appropriately disposes of the overhead variance at the end of the year?