Midtown, Inc. uses a predetermined overhead allocation rate of $67 per direct labor hour. In January, the company completed Job A23 which utilized 18 direct labor hours. Which of the following correctly describes the journal entry to allocate overhead to the job?
) debit Finished Goods Inventory $1206 and credit Manufacturing Overhead $1206
B) debit Manufacturing Overhead $67 and credit Work-in-Process Inventory $67
C) debit Work-in-Process Inventory $1206 and credit Manufacturing Overhead $1206
D) debit Cost of Goods Sold $67 and credit Finished Goods Inventory $67
C) debit Work-in-Process Inventory $1206 and credit Manufacturing Overhead $1206
Explanation: Allocated manufacturing overhead cost = Predetermined overhead allocation rate × Actual quantity of the allocation base used by each job
Allocated manufacturing overhead cost = $67 per DLHr × 18 hours = $1206
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