Sanker Inc. has provided the following data for the month of August. There were

Question

Sanker Inc. has provided the following data for the month of August. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month.

Direct Materials
_____________
Work in progress: 2,790
Finished Goods: 7,680
Cost of goods sold: 18,240
Total: 28,710

Direct Labor:
______________
Work in progress: 9,700
Finished Goods: 19,200
Cost of goods sold: 45,600
Total: 74,500

Manufacturing Overhead applied
___________________________
Work in progress: 5,440
Finished Goods: 8,000
Cost of goods sold: 18,560
Total: 32,000

Total:
_______
Work in progress: 17,930
Finished Goods: 34,880
Cost of goods sold: 82,400
Total: 135,210


Manufacturing overhead for the month was overapplied by $5,000.

The company allocates any underapplied or overapplied overhead among work in process, finished goods, and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.

The journal entry to record the allocation of any underapplied or overapplied overhead for August would included
a. credit to finished goods of $1,250
b. debit to finished goods of $34,880
c. credit to finished goods of $34,880
d. debit to finished goods of $1,250

Explanation / Answer

                               WIP        COGS       FG     Total
Overhead applied   $5,440   $18,560   $8,000   $32,000
FG $5,000/32,000    $850     $2,900   $1,250    $5,000

a. credit to finished goods of $1,250

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