Use the information below to answer the following question(s).
Because the Abernathy Company used a budgeted indirect cost allocation rate for its manufacturing operations, the amount allocated ($200,000) was different from the actual amount incurred ($225,000).
Before disposition of under/overallocated overhead, the following information was available:

-What is the journal entry used to write-off the difference between allocated and actual overhead using the proration approach?

Question

Use the information below to answer the following question(s).
Because the Abernathy Company used a budgeted indirect cost allocation rate for its manufacturing operations, the amount allocated ($200,000) was different from the actual amount incurred ($225,000).
Before disposition of under/overallocated overhead, the following information was available:
 
-What is the journal entry used to write-off the difference between allocated and actual overhead using the proration approach?

Quizplus · Accepted Answer

The proration approach involves allocating the over/underallocated overhead to work-in-progress, finished goods, and cost of goods sold based on the proportion of the actual overhead incurred in each category. The journal entry to write off the difference between allocated and actual overhead using the proration approach would be to debit Work-in-Progress, Finished Goods, and Cost of Goods Sold (in proportion to their actual overhead) and credit Manufacturing Overhead for the total amount of over/underallocated overhead. Choice D is the only option that reflects this journal entry.

Use the Information Below to Answer the Following Question(s)