-bc Carson Inc. has provided the following data for the month of May. There were
ID: 2597414 • Letter: #
Question
-bc Carson Inc. has provided the following data for the month of May. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month.
Manufacturing overhead for the month was underapplied by $10,000.
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 May would include the following:
a. credit to Finished Goods of $900.
b. debit to Finished Goods of $29,200.
c. credit to Finished Goods of $29,200.
d. debit to Finished Goods of $900.
Work-in-Process Finished Goods Cost of Goods Sold Total Direct materials $ 5,010 $ 11,500 $ 111,320 $ 127,830 Direct labor 2,430 10,500 101,640 114,570 Manufacturing overhead applied 3,200 7,200 69,600 80,000 Total $ 10,640 $ 29,200 $ 282,560 $ 322,400Explanation / Answer
Underapplied Overhead $10,000.00 (Since it is underapplied, it will now be debited in the cost books) Amount to be allocated to finished goods: = Overhead Applied to FG * Underapplied overhead Total Overhead applied 29200 = $7,200.00 * $10,000.00 $80,000.00 = $900.00 Answer D. Debit to Finished Goods of $900
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