During the year, XYZ allocated $435,000 of manufacturing overhead cost into the production process. XYZ incurred actual manufacturing overhead costs during the year of $425,000. Relevant ending balances before adjusting for any over/under-allocated manufacturing over head are:

Cost of Goods Sold (COGS)     $680,000

WIP                                            $40,000

Finished Goods                         $80,000

REQUIRED: 

1. Prepare a journal entry to write off the difference between allocated and actual overhead directly to Cost of Goods Sold.

2. Prepare a journal entry that prorates the write-off of the difference between allocated and actual overhead using ending account balances.

Answer rating: 100% (QA)

1 Manufacturing Overhead Applied 435000 Manufacturing Overhead Actual 425000 Overapplied 10000 Too m... View the full answer