You are answering the question below this sentence NOT the one at the bottom of

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You are answering the question below this sentence NOT the one at the bottom of the page

Required information [The following information applies to the questions displayed below.] Bodin Company manufactures finger splints for kids who get tendonitis from playing video games. The firm had the following inventories at the beginning and end of the month of January Finished goods Work in process Raw material January 1 125,000 235,000 134,000 January 31 $117,000 251,000 124,000 The following additional data pertain to January operations Raw material purchased Direct labor Actual manufacturing overhead Actual selling and administrative expenses $191,000 300,000 175,000 115,000 The company applies manufacturing overhead at the rate of 60 percent of direct-labor cost. Any overapplied or underapplied manufacturing overhead is accumulated until the end of the year. Required 1. Compute the company's prime cost for January Prime cost

Explanation / Answer

Answer

>debited by the amount of actual manufacturing overhead, and

>credited by the amount of applied manufacturing overhead.

The balance in Manufacturing Overhead account = $ 180,000 - $ 175,000 = $ 5,000

The balance will be a ‘CREDIT’ balance [Over Applied Overhead case]

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