Alpha Technology's Work in Process Inventory on June 1 Has

question 197

Essay

Alpha Technology's work in process inventory on June 1 has a balance of $27,200 representing Job No. 72. During June, $68,900 of direct materials were requisitioned for Job No. 72 and $5,500 of direct labor cost was incurred on Job No. 72. Manufacturing overhead is allocated at a rate of $16.00 per direct labor hour. Actual manufacturing overhead costs incurred in June amounted to $15,000. There were 700 actual direct labor hours worked in June. No new jobs were started during June. Job No. 72 is completed on June 28.
a. Determine the total cost assigned to Job No. 72.
b. Is manufacturing overhead overallocated or underallocated for the month of June? By how much?

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Definitions:

Profit

The financial gain obtained when the revenues generated from business activities exceed the expenses, costs, and taxes needed to sustain those activities.

Kinked-demand Curve

A demand curve that has a distinct bend or kink at a certain price level, often used to describe oligopolistic markets where firms face a different elasticity of demand for price increases versus price decreases.

Relatively Elastic

Describes a situation where the quantity demanded or supplied of a good or service changes significantly due to a small change in price.

Relatively Inelastic

This term describes a situation where the demand for a good or service changes by a smaller percentage than the changes in price, indicating that consumers are less sensitive to price changes.