Question

Overhead Variance (Over- or Underapplied), Closing to Cost of Goods Sold

At the end of the year, Ilberg Company provided the following actual information:

Overhead	$422,600
Direct labor cost	540,300

Ilberg uses normal costing and applies overhead at the rate of 80% of direct labor cost. At the end of the year, Cost of Goods Sold (before adjusting for any overhead variance) was $1,942,000.

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below.

Overhead Variance (Over- or Underapplied), Closing to Cost of Goods Sold
Ilberg uses normal costing. At the end of the year, Ilberg Company provided the following actual information:
DATA
Overhead	$422,600
Direct labor cost	$540,300
Unadjusted cost of goods sold	$1,942,000
"Predetermined overhead rate (% of direct labor cost)"	80%
Using formulas and cell references, perform the required analysis, and input your answers into the green cells in the Amount column. Select the corresponding choice in the dropdown in cell C14. Transfer the numeric results for the green entry cells (B14:B15) and the selected choice (C14) into the appropriate fields in CNOWv2 for grading.
Required:	Amount		Formulas
1. Overhead variance
2. Adjusted cost of goods sold

Required:

1.	Calculate the overhead variance for the year.
	$ overapplied
2.	Dispose of the overhead variance by adjusting Cost of Goods Sold.
	Adjusted COGS: $

Answer 1

Overhead Variance = 9640 Overapplied Overhead Variance = Overhead Applied - Actual Overhead Overhead Applied 432240 Actual Overhead 422600 Overhead Variance = 432240-422600 9640 Overhead Applied 80% of Direct Labor Direct Labor 540300 Overhead Applied 80% of 540300 432240 When overhead Applied is more than acutal Overhead, it is called Over Applied overhead For Closing of Overapplied Overhead Overhead Account is Debited And Cost of Goods Sold Account is Credited Or Overapplied Overhead is deducted from Cost of Goods Sold So this amount of 9640 must be deducted from Cost of goods sold Unadjusted Cost of Goods Sold 1942000 Less Over Applied overhead -9640 Adjusted Cost of Goods Sold 1932360

Note. I think the formula you can create in Excel. I have given th solution.