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Before prorating overhead, the current period overhead component of Cost of Goods Sold for Wilmington Company was $230,000, while the current period overhead component of the ending inventory was $80,000. Manufacturing overhead of $310,000 was applied during the period, whereas $296,000 was actually incurred. Wilmington has no Work-in-Process inventory at the end of the period.
-If the manufacturing overhead-variance is prorated between inventory and cost of goods sold, how much will be allocated to the ending inventory? (round to the nearest whole dollar)
A) $14,000
B) $ 0
C) $3,613
D) $2,868

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Quizplus · Accepted Answer

The manufacturing overhead variance is the difference between the applied overhead ($310,000) and the actual overhead ($296,000), which is $14,000. This variance needs to be prorated between the ending inventory and the cost of goods sold. The total before prorating is $230,000 (COGS) + $80,000 (Ending Inventory) = $310,000. The ending inventory's share of the total is $80,000 / $310,000 = 25.81%. Therefore, the ending inventory's share of the $14,000 variance is 25.81% * $14,000 = $3,613 (rounded to the nearest whole dollar).

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