Siesta inc., has provided the following datat for its first month in business:
Work-in process Finished goods Cost of goods sold

Direct material $2,380 $16,790 $43,930
Direct Labor $1,710 $16,060 $42,020
Overhead applied $1,520 $9,880 $26,600
Actual manufacturing overhead was $42,000. The work-in-process balance at the end of the month after allocation of any underapplied or overapplied manufacturing overhead for the month, using procation based on ending balances, is closest to:_____.

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Zviko Zviko · Answer 1 · 2021-01-13T01:14:12+01:00

Answer:

$4,186

Explanation:

Step 1

Determine the Overheads Applied

Total applied overhead are $38,800 ($1,520+ $9,880+$26,600)

Step 2

Determine Actual manufacturing overhead

Actual manufacturing overhead incurred is given as $42,000

Step 3

Calculate the amount under-applied or overapplied overheads

Since Actual manufacturing overhead > Applied overhead, overheads have been under-applied

Under-applied overheads are $3,200 ($42,000 - $38,800)

Step4

Allocate amount of over-applied or under applied using the balance of inventory category.

Total Inventory Categories :

Work-in process = $4,080

Finished goods = $32,850

Cost of goods sold = $85,950

Therefore,

Overheads under applied allocated to Work-in process are ( $4,080/$122,880 x $4,080 ) $106

Thus,

Balance at the end of the month = $4,080 + $106

= $4,186

The work-in-process balance at the end of the month after allocation of any underapplied manufacturing overhead for the month is $4,186