Author Question: Moira Company has just finished its first year of operations and must decide which method to use for ... (Read 53 times)

Coya19@aol.com · **on:** Mar 6, 2021

Moira Company has just finished its first year of operations and must decide which method to use for adjusting cost of goods sold. Because the company used a budgeted indirect-cost rate for its manufacturing operations, the amount that was allocated ($435,000) to cost of goods sold was different from the actual amount incurred ($425,000).

Ending balances in the relevant accounts were:

Work-in-Process

$ 40,000

Finished Goods

80,000

Cost of Goods Sold

680,000

Required:

a.	Prepare a journal entry to write off the difference between allocated and actual overhead

directly to Cost of Goods Sold. Be sure your journal entry closes the related overhead accounts.

b.	Prepare a journal entry that prorates the write-off of the difference between allocated and

actual overhead using ending account balances. Be sure your journal entry closes the related overhead accounts.

braelync · **Reply #1 on:** Mar 6, 2021

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