23 Part B: Accounting for Over/Under Allocated Overhead (Independent from Part A) (5 marks) 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 to cost of goods sold was different from the actual amount incurred. These company uses both Manufacturing Overhead Allocated and Manufacturing Overhead control accounts. 24 26 Allocated manufacturing overhead costs 222232 27 Actual manufacturing overhead costs incurred 28 30 $ $ 200,000 225,000. Required: Prepare the journal entry to dispose of the under or over allocated overhead using the proration approach based on ending account balances. If an account is not affected, please select N/A. 31 Ending balances in the relevant accounts were: 32 Cost of Goods Sold 33 Finished Goods Inventory 34 Work in Process Inventory 35 36 Percentage Allocation 400,000 62.5% $ 80,000 12.5% S 160,000 25.0% $ 640,000 100.0% 37 Account 38 Cost of Goods Sold 39 Finished Goods Inventory 40 WIP Inventory 41 Manufacturing Overhead Allocated 42 Manufacturing Overhead Control 43 Debit, Credit or N/A Amount Part C: Compare and contrast normal and actual costing. How could you explain the advantages/disadvantages of each to 44 management (a non-accountant)? (3 marks) 45