ABC Manufacturing Inc. ends the month with two jobs still in ...

[gonzo233]

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]

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[gonzo233]

Thanks for the timely response, appreciate it

[amcvicar]

Gracias!