Question

Barefoot Running​ Company's work in process inventory on June 1 has a balance of​ $22,900 representing Job No. 265. During​ June, $50,700 of direct materials were requisitioned for Job No. 265 and​ $35,500 of direct labor cost was incurred on Job No. 265. Manufacturing overhead is allocated at​ 130% of direct labor cost. Actual manufacturing overhead costs incurred in June amounted to​ $41,300. No new jobs were started during June. Job No. 265 is completed on June 28. Is manufacturing overhead overallocated or underallocated for the month of​ June? By how​ much?

Answer 1

$4,850 under allocated

Step-by-step explanation:

Giving the following information:

Manufacturing overhead is allocated at​ 130% of direct labor cost.

The actual manufacturing overhead costs incurred in June amounted to​ $41,300.

Job No. 265:

Direct labor= $35,500

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base= 1.3*35500= $46,150

Over/under allocation= real MOH - allocated MOH= 46150 - 41300= $4,850 under allocated