Jacobs Company manufactures refrigerators. The company uses a budgeted indirect-
ID: 2349802 • Letter: J
Question
Jacobs Company manufactures refrigerators. The company uses a budgeted indirect-cost rate for its manufacturing operations and during 20X5 allocated $1,000,000 to work-in-process inventory. Actual overhead incurred was $1,100,000. Ending balances in the following accounts are: Work-in-Process $ 100,000 Finished Goods 750,000 Cost of Goods Sold 4,150,000 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.Explanation / Answer
. Work-in-process $100,000
Finished goods 750,000
Cost of goods sold 4,150,000
Total $5,000,000 2.0% x $100,000 = $2,000
=15.0x $100,000 = $15,000
= 83.0 x $100,000 = $83,000 100.0%
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Manufacturing Overhead Allocated 1,000,000
Work-in-Process 2,000
Finished Goods 15,000
Cost of Goods Sold 83,000
Manufacturing Overhead Control 1,100,000
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