The image shows financial data related to Afro Company. It describes the allocation of an under-applied manufacturing overhead cost to three specific accounts: Cost of Goods Sold, Work in Process, and Finished Goods. Below is a breakdown:

1. Afro Company has:

   • Birr 50,000 work in process,
   • Birr 30,000 finished goods (reported on its balance sheet),
   • Birr 120,000 cost of goods sold (reported in its income statement).

2. The under-applied manufacturing overhead is allocated as follows:

   • Cost of goods sold: Birr 3,360
   • Work in process: Birr 1,400
   • Finished goods: Birr 840

These are portions of the total under-applied overhead distributed across relevant accounts to reflect the correct costs.

Would you like more details on how these allocations are calculated or more information on any other aspect?

Here are five related questions to explore further:

1. How is under-applied overhead typically calculated in cost accounting?
2. What does it mean when overhead is "under-applied" versus "over-applied"?
3. Why are the under-applied costs allocated across different accounts like work in process, finished goods, and cost of goods sold?
4. How does this allocation affect financial statements such as the balance sheet and income statement?
5. Can you explain how adjusting for under-applied overhead impacts a company’s profitability?

Tip: Understanding how manufacturing overhead is applied and allocated can help improve cost control and financial accuracy in accounting.