Question

Castagnola Inc. has provided the following data for the month of January. There were no beginning...

Castagnola Inc. has provided the following data for the month of January. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month.

Work In Process Finished Goods Cost of Goods Sold Total
Direct materials $ 880 $ 5,500 $ 23,100 $ 29,480
Direct labor 4,100 17,600 73,920 95,620
Manufacturing overhead applied 2,460 7,380 31,160 41,000
Total $ 7,440 $ 30,480 $ 128,180 $ 166,100

Manufacturing overhead for the month was overapplied by $1,000.

The company allocates any underapplied or overapplied manufacturing overhead among work in process, finished goods, and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.

The finished goods inventory at the end of January after allocation of any underapplied or overapplied manufacturing overhead for the month is closest to:

  • $30,660

  • $30,664

  • $30,300

  • $30,296

Homework Answers

Answer #1

Finished goods inventory before allocation of any overapplied manufacturing overhead = $30,480

Over applied overhead to be deducted from the finished goods inventory = Over applied overhead x Overhead applied to finished goods/Total overhead applied

= 1,000 x 7,380/41,000

= $180

The finished goods inventory at the end of January after allocation of any underapplied or overapplied manufacturing overhead for the month is closest to = Finished goods inventory before allocation of any overapplied manufacturing overhead - Over applied overhead to be deducted from the finished goods inventory

= 30,480 - 180

= $30,300

Third option is the correct option

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