Cost of Goods Sold $12,600,000
Finished Goods Control $ 2,625,000
Work-in-Process Control $375,000
Dispose of the amount using a proration based on ending balances (before proration) in Work-in-Process Control, Finished Goods Control, and Cost of Goods Sold. Begin by selecting the formula to calculate the adjustment to each account. Then enter the amounts in the formula. Ending Balance x Allocation Rate = Adjustment
COGS =
Finished Goods Control =
Work-in-Progress Control =
What is the allocation rate if original COGS was $12,000,000
Solution:
1. Ending Balance of COGS = $12,000,000
Adjustment amount in COGS = $12,600,000 - $12,000,000 = $600,000
Now,
Ending Balance x Allocation Rate = Adjustment
$12,000,000 *Allocation Rate = $600,000
Allocation Rate = $600,000 / $12,000,000 = 5%
2. Adjusted amount of Finished Goods Control (105%) = $2,625,000
Allocation Rate = 5%
Adjustment = $2,625,000 *5%/ 105% = $125,000
3. Adjusted amount of Work in process Control (105%) = $375,000
Allocation Rate = 5%
Adjustment = $375,000 *5%/ 105% = $17857.14
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