Klink Corporation Applies Overhead Based Upon Machine-Hours

Klink Corporation applies overhead based upon machine-hours.Budgeted factory overhead was $295,400 and budgeted machine-hours were 21,100.Actual factory overhead was $319,800 and actual machine-hours were 18,090.Before disposition of under/overallocated overhead, the following information was available:
Required:
a.Determine the budgeted factory overhead rate per machine-hour.
b.Compute the over/underallocated overhead.
c.Prepare the journal entry to dispose of the variance using the write-off to cost of goods sold approach.The corporation uses Manufacturing Overhead Allocated and Manufacturing Overhead control accounts.
d.Prepare the journal entry to dispose of the variance using the proration approach.
e.Identify three value chain categories and provide an example for each on how Klink Corporation could reduce its indirect costs.

Correct Answer:

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a.$295,400/21,100 hrs.= $14.00 per hour
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