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Mallet Company had only Job 844 in process on March 1 of the current year. The job had been charged with $2,000 of direct material

Mallet Company had only Job 844 in process on March 1 of the current year. The job had been charged with $2,000 of direct material cost, $2,500 of direct labour cost, and $1,750 of manufacturing overhead cost. The company assigns overhead cost to jobs at a predetermined rate of 70% of direct labour cost. Any underapplied or overapplied overhead cost is closed to Cost of Goods Sold at the end of the month. During March, the following activity and amounts were recorded by the company:

Raw materials (all direct materials):

Purchased during the month

$29,500

Used in production

$30,500

Labour:

Direct labour hours worked during the month

2,500

Direct labour cost incurred

$26,500

Indirect labour costs incurred

$5,500

Manufacturing overhead costs incurred (total)

$18,500

Inventories:

Raw materials (all direct) March 31

$7,500

Work in process, March 31

$14,500

Work in process inventory contained $5,500 of direct labour cost. The entry to dispose of the underapplied or overapplied overhead cost for the month would include:

Question 10 options:

1) a debit of $50 to Cost of Goods Sold.
2) a debit of $50 to Manufacturing Overhead.
3) a debit of $5,500 to Manufacturing Overhead.
4) a credit of $5,500 to Cost of Goods Sold.

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