Before Prorating the Manufacturing Overhead Costs at the End of 2020

question 136

Multiple Choice

Before prorating the manufacturing overhead costs at the end of 2020, the Cost of Goods Sold and Finished Goods Inventory accounts had applied overhead costs of $57,500 and $20,000 in them, respectively. There was no Work-in-Process at the beginning or end of 2020. During the year, manufacturing overhead costs of $74,000 were actually incurred. The balance in the Applied Manufacturing Overhead was $77,500 at the end of 2020.
- If the under or overapplied overhead is prorated between Cost of Goods Sold and the inventory accounts, how much will be allocated to the Finished Goods Inventory? (rounded to the nearest whole dollar)

• A) $903.
• B) $1,217.
• C) $1,283.
• D) $2,597.

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Definitions:

Reticular Layer

The deeper layer of the dermis in the skin, comprised mainly of dense irregular connective tissue, which provides strength and elasticity.

Dermatitis

An inflammation of the skin that leads to itchiness, redness, and sometimes swelling, which can be caused by allergies, irritants, or genetic factors.

Inflammatory Condition

A response of body tissues to injury or irritation characterized by pain, swelling, redness, and heat.

Reticular Layer

The deeper layer of the dermis in the skin, characterized by its dense network of collagen and elastin fibers.