Beginning balances were as follows: Raw Materials, $10,000; Work-in-Process, $12

Question

Beginning balances were as follows: Raw Materials, $10,000; Work-in-Process, $12,000; Finished Goods, $8,000. Transactions during the month were as follows:

a) Paid cash for $60,000 of materials.
b) Materials totaling $35,000 were used in production, of which $24,000 were direct.
c) Labor costs of $90,000 were incurred, of which $18,000 were indirect.
d) Factory utility costs of $4,500 were paid.
e) Depreciation on factory equipment was $2,200
f) Paid $3,100 for property taxes on the factory.

g) Manufacturing overhead costs of $16,000 were allocated to production.
h) Goods costing $105,000 were completed.
i) Goods costing $85,000 were sold on account for $100,000.

Determine the ending balance in the Manufacturing Overhead account. Is it a debit or credit balance? Is it overallocated or underallocated?

Explanation / Answer

Overhead Cost Incured Indirect Material 35000-24000 11000 Indirect labor 18000 Factory utility Cost 4500 Depreciation 2200 property taxes on the factory 3100 Overhead Cost Incured 38800 Manufacturing overhead costs allocated to production 16000 underallocated..Credit balance 22800

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