Use this information for questions 2, 3, 4, & 5. A company that manufactures aut

Question

Use this information for questions 2, 3, 4, & 5. A company that manufactures automobiles applies manufacturing overhead on the basis of direct labor hours. For the month of August, the company estimated that it would incur $500,000 of manufacturing overhead and 50,000 direct labor hours. At the end of the month, the company realized it actually used 65,000 direct labor hours and incurred $450,000 of manufacturing overhead. The company pays workers $8 per direct labor hour, and used $330,000 in direct materials in August. At the beginning of the month, the balance in the Work in Process inventory account was $175,000 and at the end of the month, the balance in the Work in Process inventory account was $325,000.

Explanation / Answer

Question 3.

Answer is D. $1,500,000

Question 4

Answer is A. $1,350,000

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Raw material used $     330,000 Add: Direct Labour ($8*65,000) $     520,000 Add: Manufacturing overhead $     650,000 Total manufacturing cost $ 1,500,000 Add:Beginning work in progress inventory $     175,000 Less: Ending work in progress inventory $     325,000 Cost of goods manufactured $ 1,350,000

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