Answer:
B. $6,150 of the underallocated manufacturing overhead should be allocated to work-in-process
Explanation:
Calculation to determine what would be the correct way to prorate it based on ending balances before proration
First step is to calculate the Balance of work in process before proration
Balance of work in process before proration= ($10,000 + $2,000 + $8,000) + ($30,000 + $2,000 + $12,000)
Balance of work in process before proration= $64,000
Now let calculate the Underallocated overhead to be allocated to WIP
Underallocated overhead to be allocated to WIP= $10,000 * $64,000 / ($64,000+$40,000)
Underallocated overhead to be allocated to WIP = $10,000 * $64,000 / $104,000
Underallocated overhead to be allocated to WIP = $6,150
Therefore Based on the above calculation what would be the correct way to prorate it based on ending balances before proration is that $6,150 of the underallocated manufacturing overhead should be allocated to work-in-process
