Midtown Inc.uses a predetermined overhead allocation rate of $63.20 per direct labor hour.In January,the company completed Job A23 which utilized 15 direct labor hours.Which of the following correctly describes the journal entry to allocate overhead to the job?

Question

Quizplus · Accepted Answer

To allocate overhead to Job A23, we need to use the predetermined overhead allocation rate of $63.20 per direct labor hour. Since Job A23 utilized 15 direct labor hours, the total overhead allocated to this job will be 15 x $63.20 = $948. Therefore, we need to debit Work-in-Process Inventory (the account where the costs of Job A23 are being recorded) for $948 and credit Manufacturing Overhead (the account where the overhead costs are being accumulated) for $948. This will ensure that the allocated overhead is properly recorded as part of the cost of Job A23, and Manufacturing Overhead account is reduced accordingly.