Jorst Manufacturing Company Began Business on January 1, 2012 -
Jorst's Allocation of Overhead Costs Left a Debit Balance

question 46

Multiple Choice

Jorst Manufacturing Company began business on January 1, 2012. During its first year of operation, Jorst worked on 5 industrial jobs, and reported the following information at year-end:
$$\begin{array} { | l | r | r | r | r | r | } \hline & \text { Job 1 } & \text { Job 2 } & \text { Job 3 } & \text { Job 4 } & \text { Job 5 } \\\hline \text { Direct Materials } & 1,00 \mathrm {~d} & 7,500 & 4,000 & 3,500 & 1,500 \\\hline \text { Direct Labor } & 12,00 \mathrm {~g} & 20,000 & 13,000 & 12,000 & 800 \\\hline \text { Allocated Mfg. Overhead } & 1,500 & 6,000 & 2,500 & 7,500 & 200 \\\hline \text { Job completed: } & \text { Jun 30 } & \text { Sep 1 } & \text { Oct 15 } & \text { Nov 1 } & \text { Not completed } \\\hline \text { Job sold: } & \text { Jul 10 } & \text { Sep 12 } & \text { Not sold } & \text { Not sold } & \text { N/A } \\\hline \text { Revenues: } & 25,000 & 39,000 & \text { N/A } & \text { N/A } & \text { N/A } \\\hline\end{array}$$
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Jorst's allocation of overhead costs left a debit balance of $1,200 in the Manufacturing overhead account which was adjusted to zero at year-end. What was the final balance in Cost of goods sold?

• A) $48,000
• B) $49,200
• C) $46,800
• D) $91,700

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Definitions:

EMV

Expected Monetary Value; a statistical technique in decision-making that calculates the average outcome when the future includes scenarios that may or may not happen.

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The process of determining the level of capacity needed to meet varying demands for a business's goods or services.

Demand Forecast

The process of estimating the future demand for a product or service based on historical data and trends.