Question

Weatherhead Inc. has provided the following data for the month of March. There were no beginning inventories, consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month. Direct materials Direct labor Manufacturing overhead applied Total Cost of Work In Finished Goods Process Goods Sold Total $ 4,240 $14,740 $ 41,820 $ 60,800 10,320 29,480 83,880 123,680 5,860 11,740 35,060 52,660 $20,420 $55,960 $160,760 $237, 140 Manufacturing overhead for the month was overapplied by $3,500. The Corporation 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 manufacturing overhead applied during the month in those accounts. The work in process inventory at the end of March after allocation of any underapplied or overapplied manufacturing overhead for the month is closest to: (Round intermediate percentage computations to the nearest whole percent.)

Answer 1

Given- Manufacturing overhead applied :- Work in Process - $5,860

Finished Goods - $11,740

Cost of Goods Sold - $35,060

Total - $52,660

Manufacturing overhead is overapplied by $3500

Total Work in process - $20,420

Required:- Value of work in process after allocation of overapplied manufacturing overhead

It is given that allocation of overapplied manufacturing overhead among work in process, finished goods and cost of goods is on the basis of the manufacturing overhead applied during the month in those accounts.

So Percentage of overhead applied to work in process is computed , that is as follows

= Maufacturing Overhead applied to work in process / Total Maufacturing overhead

= $5,860 / $52,660

= 11.12% which is rounded off to 11.00%

Allocation of overapplied manufacturing overhead to work in process is (on the basis of percentage of manufacturing overhead apllied to it)

= $3500 x 11%

= $385

$\therefore$ Value of work in process after allocation of overapplied manufacturing overhead

= Total work in process - overapplied manufacturing overhead

= $20,420 - $385

=$20,035

$\therefore$ Third option is correct $20,035