Moira Company Has Just Finished Its First Year of Operations

question 45

Essay

Moira Company has just finished its first year of operations and must decide which method to use for adjusting cost of goods sold.Because 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).
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:

Economic Necessity

The requirement of economic resources or actions to satisfy basic needs or preserve financial stability.

Puritans

A group of English Protestants in the 16th and 17th centuries who sought to purify the Church of England from its Catholic practices.

Heads of Households

Individuals who are recognized as the primary providers and decision-makers within their home or family unit.

Future Slaves

A speculative concept referring to individuals or populations potentially subjected to extreme exploitation or control in future societal or economic structures.