Moira Company Has Just Finished Its First Year of Operations

question 78

Essay

Moira Company has just finished its first year of operations and must decide which method to use for adjusting cost of goods sold.The company used a budgeted indirect-cost rate for its manufacturing operations.The amount that was allocated ($435,000)to cost of goods sold was different from the actual amount incurred ($425,000).These were the respective ending balances in the Manufacturing Overhead Allocated and Manufacturing Overhead control accounts.Ending balances in the relevant accounts were:
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.

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Definitions:

Synapse

A junction between the axon terminals of one neuron and the dendrites or cell body of another neuron.

Hormones

A substance secreted by an endocrine gland that regulates various body functions.

Pituitary Gland

A small endocrine gland in the brain controlling various physiological processes through the release of hormones.

Bloodstream

The flowing blood within the circulatory system of the body, carrying oxygen, nutrients, and waste products to and from the tissues.