Moira Company Has Just Finished Its First Year of Operations

question 49

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:

Productivity

A measure of the efficiency of a person, machine, system, or process in converting inputs into useful outputs.

Self-Actualization

The act of fulfilling one's innate abilities and potentials, recognized as a fundamental motivation or desire in every person.

Growth Needs

Psychological needs that drive an individual to achieve personal development and realizaiton, inspired by Maslow's higher-order needs.

Esteem Needs

Esteem needs encompass an individual's desire for respect, self-esteem, self-confidence, and the recognition and appreciation from others.