Bullz Company manufactures an energy drink.The company uses a budgeted indirect-cost rate for its manufacturing operations and during 2014 allocated $1,000,000 to work-in-process inventory.Actual overhead incurred was $1,200,000.
Ending balances in the following accounts are:
$\begin{array}{lr}
\text { Work-in-Process } & \$ 100,000 \
\text { Firished Goods } & 750,000 \
\text { Cost of Goods Sold } & 4,150,000
\end{array}$ 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.

Question

Bullz Company manufactures an energy drink.The company uses a budgeted indirect-cost rate for its manufacturing operations and during 2014 allocated $1,000,000 to work-in-process inventory.Actual overhead incurred was $1,200,000.
 Ending balances in the following accounts are:
$\begin{array}{lr}
\text { Work-in-Process } & \$ 100,000 \
\text { Firished Goods } & 750,000 \
\text { Cost of Goods Sold } & 4,150,000
\end{array}$ 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.

Quizplus · Accepted Answer

The Answer of Bullz Company manufactures an energy drink.The company uses a budgeted indirect-cost rate for its manufacturing operations and during 2014 allocated $1,000,000 to work-in-process inventory.Actual overhead incurred was $1,200,000.
 Ending balances in the following accounts are:
$\begin{array}{lr}
\text { Work-in-Process } & \$ 100,000 \
\text { Firished Goods } & 750,000 \
\text { Cost of Goods Sold } & 4,150,000
\end{array}$ 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.

Bullz Company Manufactures an Energy Drink Required: A

Bullz Company Manufactures an Energy Drink Required:
A