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Prorating Over/Underabsorbed Overhead
A computer manufacturer has the following account balances at the end of the year.
Work-in-process $100,000
Finished goods 800,000
Cost of goods sold 2,000,000
Total $2,900,000
These accounts contain $500,000 of allocated overhead. Actual overhead, however, is $600,000.
Required: What are the account balances after prorating the underabsorbed overhead?
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