81 82 moira company has just finished its first year of operations and must decide 4302278

 

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82) Moira Company has just finished its first year of operations and must decide which method to use for adjusting cost of goods sold.

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 Goods80,000

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.
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83) A manufacturing company has actual overhead of $570,000, budgeted overhead of $620,000, and budgeted 18,000 direct labour hours. Management believes that direct labour hours are the best allocation base to use for allocation of overhead. Actual direct labour hours were 20,000 hours.

 

Assuming that the company used normal costing methods for allocation, and has the following account balances in its General Ledger, what are the adjustments for each account using the best proration method available?

 

Manuf OVH

BalanceAllocatedAdjustment

Work-in-process control$62,000$58,000________

Finished Goods$91,000$210,000________

Cost of Goods Sold$1,500,000$1,200,000________
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