Author Question: ABC Manufacturing Inc. ends the month with two jobs still in progress. Job 5 has $10,000 of ... (Read 59 times)

gonzo233 · **on:** Mar 6, 2021

ABC Manufacturing Inc. ends the month with two jobs still in progress. Job 5 has $10,000 of materials, $2,000 of direct labor and $8,000 of manufacturing overhead allocated. Job 6 has $30,000 of materials, $2,000 of direct labor and $12,000 of manufacturing overhead allocated. The cost of goods sold for the month was $40,000 and there was no finished goods in stock as the month ended. If the manufacturing overhead was underallocated by $10,000, which of the following choices would be the correct way to prorate it based on ending balances before proration?
◦ The entire $10,000 of underallocated manufacturing overhead should be allocated to cost of goods sold
◦ $4,000 of the underallocated manufacturing overhead should be split between Job 6 and cost of goods sold
◦ $2,000 of the overallocation should be allocated to Job 5
◦ The entire $10,000 of underallocated manufacturing overhead should be added to operating expenses for the month

Sophiapenny · **Reply #1 on:** Mar 6, 2021

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