The following account balances at the beginning of January were selected from the general ledger of Ocean City Manufacturing Company:
Work in process inventory $0
Raw materials inventory $28,000
Finished goods inventory $40,000
Additional data:
1. Actual manufacturing overhead for January amounted to $62,000.
2. Total direct labor cost for January was $63,000.
3. The predetermined manufacturing overhead rate is based on direct labor cost. The budget for the year called for $250,000 of direct labor cost and $350,000 of manufacturing overhead costs.
4. The only job unfinished on January 31 was Job No. 151, for which total direct labor charges were $5,200 (800 direct labor hours) and total direct material charges were $14,000.
5. Cost of direct materials placed in production during January totaled $123,000. There were no indirect material requisitions during January.
6. January 31 balance in raw materials inventory was $35,000.
7. Finished goods inventory balance on January 31 was $34,500.
Has manufacturing overhead been overallocated or underallocated and by what amount as of January 31?
A) $26,200 overallocated
B) $17,000 underallocated
C) $17,000 overallocated
D) $26,200 underallocated
Quick Reply
