Stanley Company Applies Overhead Based on Machine Hours Required:
A) Compute the Budgeted Factory Overhead Rate

question 13

Essay

Stanley Company applies overhead based on machine hours.The following data was available:
$$\begin{array} { l l } \text { Budgeted factory overhead costs}&\$280,000 \\ \text {Budgeted machine hours }&\$20,000 \\ \text {Actual factory overhead costs }&\$292,000 \\ \text {Actual machine hours }&\$19,050 \\ \text {Cost of goods sold }&\$560,000 \\ \text { Direct materials inventory, ending balance }&\$ 60,000\\ \text {Work-in-process inventory, ending balance }&\$190,000 \\ \text { Finished goods inventory, ending balance}&\$ 250,000\\\end{array}$$
Required:
A) Compute the budgeted factory overhead rate.
B) Compute the underapplied or overapplied factory overhead.
C) Under the immediate write-off approach to overhead variances, how would you dispose of the overhead variance?
D) If the immediate write-off approach to overhead variances is not used, how would you dispose of the overhead variance?

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Definitions:

Projection

A defense mechanism where an individual ascribes their own unacceptable thoughts, feelings, or motives to another person.

Repression

A defense mechanism where unpleasant thoughts, memories, or desires are excluded from conscious awareness.

Defence Mechanism

Psychological strategies used by individuals to cope with reality and maintain self-image by unconsciously denying or distorting reality.

Repression

A defense mechanism where an individual unconsciously pushes disturbing thoughts, desires, or experiences out of conscious awareness.