General ledger relationships, underallocation and overallocation. (S. Sridhar, adapted) Northley Industries is a manufacturer of sailboats. The following partial information for 2010 is available:

ADDITIONAL INFORMATION 1. Direct manufacturing labour wage rate was $16 per hour.
2. Manufacturing overhead (MOH) is allocated at $25 per direct manufacturing labour-hour (DMLH).
3. During the year, sales revenues were $1,664,000, and marketing and distribution expenses were $199,700.
REQUIRED 1. What was the amount of direct materials issued to manufacturing during the year?
2. What was the amount of manufacturing overhead allocated to jobs during the year?
3. What was the cost of jobs completed during the year?
4. What was the balance in work-in-process inventory on December 31, 2010?
5. What was the cost of goods sold before any proration of underallocated or overallocated overhead?
6. What was the underallocated or overallocated manufacturing overhead for the year?
7. Dispose of the underallocated or overallocated manufacturing overhead using

a. Immediate write-off to Cost of Goods Sold

b. Proration based on ending balances (before proration) in Work-in-Process, Finished Goods, and Cost of Goods Sold.
8. Using each of the disposition methods in requirement 7, calculate operating income for the year.
9. Which disposition method in requirement 7 do you recommend Northley use? Explain your answer briefly.LO1

Transcribed Image Text:

Material Control 1-1-2010 32,000 431,000 Finished Goods Control 1-1-2010 12,250 1,307,250 Work-in-Process Control 18,000 403,000 1-1-2010 Direct Manufacturing Labour 380,000 1,280,000 Manufacturing Overhead Control 543,000 Manufacturing Overhead Allocated Cost of Goods Sold