Barefoot Running Company's work in process inventory on June 1 has a balance of $22,900 representing Job No. 265. During June, $50,700 of direct materials were requisitioned for Job No. 265 and $35,500 of direct labor cost was incurred on Job No. 265. Manufacturing overhead is allocated at 130% of direct labor cost. Actual manufacturing overhead costs incurred in June amounted to $41,300. No new jobs were started during June. Job No. 265 is completed on June 28. Is manufacturing overhead overallocated or underallocated for the month of June? By how much? A. $4,850 overallocatedB. $4,850 underallocatedC. $11,530 underallocatedD. $11,530 overallocated

Question

Jonathan Henderson

Business

17 December, 15:26

Barefoot Running Company's work in process inventory on June 1 has a balance of $22,900 representing Job No. 265. During June, $50,700 of direct materials were requisitioned for Job No. 265 and $35,500 of direct labor cost was incurred on Job No. 265. Manufacturing overhead is allocated at 130% of direct labor cost. Actual manufacturing overhead costs incurred in June amounted to $41,300. No new jobs were started during June. Job No. 265 is completed on June 28. Is manufacturing overhead overallocated or underallocated for the month of June? By how much? A. $4,850 overallocatedB. $4,850 underallocatedC. $11,530 underallocatedD. $11,530 overallocated

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Answers (1)

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Kristina Armstrong · Answer 1

The correct answer is A.

Explanation:

Giving the following information:

Job No. 265 incurred $35,500 on direct labor costs. Manufacturing overhead is allocated at 130% of direct labor cost. The actual manufacturing overhead costs incurred in June amounted to $41,300.

First, we need to calculate the manufacturing overhead allocated:

Allocated MOH = Estimated manufacturing overhead rate * Actual amount of allocation base

Allocated MOH = 1.30*35,500 = $46,150

Now, we can calculate the under/over allocation:

Over/under allocation = real MOH - allocated MOH = 41,300 - 46,150 = 4,850 overallocated