Neptune Fabrication Plant Has Provided You with the Following Information

question 37

Multiple Choice

Neptune Fabrication Plant has provided you with the following information: $\begin{array}{|l|r|}\hline \text { Total manufacturing overhead costs estimated at the } & \\\text { beginning of the year } & \$ 252,000 \\\hline \text { Total direct labor costs estimated at the beginning of the } &\\\text { year } & \$ 123,000 \\\hline\begin{array}{l}\text { Total direct labor hours estimated at the beginning of the } \\\text { year }\end{array} & \text { 5,250 direct labor hours } \\\hline \text { Actual manufacturing overhead costs for the year } & \$ 241,000 \\\hline \text { Actual direct labor costs for the year } & \$ 131,000 \\\hline \text { Actual direct labor hours for the year } & 5,000 \text { direct labor hours }\\\hline\end{array}$
The company bases its manufacturing overhead allocation on direct labor hours.What was the unadjusted ending balance in the Manufacturing Overhead account?

• A)$27,390 credit balance
• B)$27,390 debit balance
• C)$1,000 credit balance
• D)$1,000 debit balance

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Definitions:

Investment Centre

A segment or area of a business responsible for both its revenue and its investments.

Residual Income

The amount of income that exceeds the minimum rate of return or hurdle rate, often used in performance measurement.

Operating Assets

Assets that are used for the core operations of a business, necessary for creating goods or services to be sold.

Residual Income

Operating income that remains after deducting all required costs of capital from net operating profits, often used in performance measurement.