1. 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 predetermined overhead rate based on Direct Labor Hours with the following relevant information:

Budgeted Manufacturing Overhead	$500,000
Actual Manufacturing Overhead	$400,000
Budgeted Direct Labor Hours	20,000 hours
Actual Direct Labor Hours	21,000 hours

Ending balances in the relevant accounts were:

Raw Materials	$26,432
Work-in-Process	40,000
Finished Goods	80,000
Cost of Goods Sold	680,000

Required:

1. Prepare the entry to record the actual manufacturing overhead that was incurred (50% was depreciation and 50% utilities payable).
2. Record the entry to allocate the overhead to the jobs.
3. How much is the overhead under-allocated or over-allocated?
4. Prepare the entry to close out the over or under allocated at the end of the period if it is not prorate
5. Prepare the entry at the end of the period if it is prorated.
6. Would you recommend that closing out the overhead should follow d or e. Explain your answer. Without an explanation, you will lose three points automatically.