Company manufactures high quality musical instruments for professional musicians. The company uses normal costing and...
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Accounting
Company manufactures high quality musical instruments for professional musicians. The company uses normal costing and allocates manufacturing overhead based on direct labor hours.
For 2020, the budgeted manufacturing overhead was $500,000 and the budgeted labor-hours were 10,000. The actual hourly wage paid to workers was $42 and the actual labor cost was $462,000. The actual manufacturing overhead was $600,000.
Before any adjustments, the ending balances in the following accounts are:
Direct materials $500,000
Work-in-Process 250,000
Finished Goods 750,000
Cost of Goods Sold 3,000,000
Prepare a journal entry that prorates the write-off of the difference between the allocated and actual overhead using the proration approach based on the ending account balances.
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