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
Finished Goods $80,000
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.
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