Jacobs Company manufactures refrigerators.The company uses a budgeted indirect-cost rate for its manufacturing operations and during 2018 allocated $1,000,000 to work-in-process inventory.Actual overhead incurred was $1,100,000.
Ending balances in the following accounts are:
$\begin{array}{ll}
\text { Work-in-Process } & \$ 100,000 \
\text { Finished Goods } & 750,000 \
\text { Cost of Goods Sold } & 4,150,000
\end{array}$
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

Jacobs Company manufactures refrigerators.The company uses a budgeted indirect-cost rate for its manufacturing operations and during 2018 allocated $1,000,000 to work-in-process inventory.Actual overhead incurred was $1,100,000.
Ending balances in the following accounts are:
 $\begin{array}{ll}
\text { Work-in-Process } & \$ 100,000 \
\text { Finished Goods } & 750,000 \
\text { Cost of Goods Sold } & 4,150,000
\end{array}$ 
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 Jacobs Company manufactures refrigerators.The company uses a budgeted indirect-cost rate for its manufacturing operations and during 2018 allocated $1,000,000 to work-in-process inventory.Actual overhead incurred was $1,100,000.
Ending balances in the following accounts are:
 $\begin{array}{ll}
\text { Work-in-Process } & \$ 100,000 \
\text { Finished Goods } & 750,000 \
\text { Cost of Goods Sold } & 4,150,000
\end{array}$ 
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.

Jacobs Company Manufactures Refrigerators Required: A

Jacobs Company Manufactures Refrigerators Required:
A