The chief controller reported that $184,000 of indirect costs related to manufacturing occurred during the fiscal year. Throughout the year, $179,000 was allocated to jobs using the plantwide allocation method.
First, did the company over- or under-allocate MOH?
Second, the controller now needs to close out the manufacturing overhead account and adjust Cost of Goods Sold accordingly. What is the journal entry to do so?
Overallocated Manufacturing Overhead
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Overallocated Manufacturing Overhead
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Underallocated Manufacturing Overhead
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Underallocated Manufacturing Overhead
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Actual Overheads = $ 184,000
Allocated Overheads = $ 179,000
Hence, the company under - allocate MOH
Now this difference is directly debited to Cost of Goods sold.
Hence, the Journal Entry for this is :
Cost of Goods Sold $ 5,000
Manufacturing Overheads $ 5,000
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