Question: Princeton Manufacturing budgeted 325 000 and incurred 337 000 of overhead costs

Princeton Manufacturing budgeted $325,000 and incurred $337,000 of overhead costs in the past year. During the year, it allocated $302,000 to its production. An extract from the company’s financial records showed the following account balances:
Allocated MOH in Work-in-Process Inventory ...... $52,246
Allocated MOH in Finished Goods Inventory ...... $75,802
Allocated MOH in Cost of Goods Sold .......... $173,952
1. Calculate the amount of under-allocated or over-allocated manufacturing overhead for the year.
2. Prepare the journal entry to dispose of this under-allocated or over-allocated overhead amount using.
a. Immediate write-off to Cost of Goods Sold.
b. Proration based on the manufacturing overhead allocated (before proration) in Work-in-Process Inventory, Finished Goods Inventory, and Cost of Goods Sold.
3. Which method do you recommend for this company?

  • CreatedJuly 31, 2015
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