The Following Account Balances at the Beginning of January Were

question 128

Multiple Choice

The following account balances at the beginning of January were selected from the general ledger of Sailor Manufacturing Company: Work in process inventory $0
Raw materials inventory $26,000
Finished goods inventory $46,000
Additional data:
1) Actual manufacturing overhead for January amounted to $62,000.
2) Total direct labor cost for January was $57,000.
3) The predetermined manufacturing overhead rate is based on direct labor cost.The budget for the year called for $300,000 of direct labor cost and $360,000 of manufacturing overhead costs.
4) The only job unfinished on January 31 was Job No.1002,for which total direct labor charges were $6,300 (800 direct labor hours) and total direct material charges were $12,000.
5) Cost of direct materials placed in production during January totaled $101,000.There were no indirect material requisitions during January.
6) January 31 balance in raw materials inventory was $32,000.
7) Finished goods inventory balance on January 31 was $34,500.
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Has manufacturing overhead been overallocated or underallocated and by what amount as of January 31?

• A)$ 14,500 overallocated
• B)$ 14,500 underallocated
• C)$ 6,400 overallocated
• D)$ 6,400 underallocated

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Definitions:

Bank Statement

A document issued by a bank summarizing an account's transactions, including deposits, withdrawals, and current balance, over a specific period.

Deposits In Transit

Deposits made in a bank account that have not yet been processed and posted by the bank to the depositor's account balance.

NSF Check

A check that cannot be processed due to insufficient funds in the account it's drawn on, leading to a "non-sufficient funds" status.

Bank Statement

A monthly document provided by a bank detailing the account activity, including deposits, withdrawals, and current balance.