Work in Process Inventory Direct Material 277,200 Direct Labor 192,000 Applied O

Question

Work in Process Inventory

Direct Material                  277,200

Direct Labor                      192,000

Applied Overhead 268,800

Cost of completed jobs              ???

The company applies overhead on the basis of direct labor cost. Only one job was steill in process on May 31. The job had $75,450 in direct material and $36,200 in direct labor cost assigned to it.

a. What was the predetermined overhead application rate?

b. What was the balace in WIP Inventory at the end of May?

c. What was the total cost of jobs completed in May?

Direct Material                  277,200

Direct Labor                      192,000

Applied Overhead 268,800

Cost of completed jobs              ???

Explanation / Answer

a. What was the predetermined overhead application rate? Applied overhead/direct labor cost = 268,800/192,000 = $1.40 per direct labor dollar b. What was the balace in WIP Inventory at the end of May? Direct materials + direct labor + applied overhead, which is direct labor times the overhead application rate = 75,450 + 36,200 + 1.40*36,200 = 162,330 c. What was the total cost of jobs completed in May? Total costs – cost of job still in process = 277,200 + 192,000 + 268,800 – 162,330 = 575,670

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