On July 1, Tin Hau Company\'s Work in Process Inventory account showed beginning

Question

On July 1, Tin Hau Company's Work in Process Inventory account showed beginning balance of $9,000. The Materials Inventory account showed a beginning balance of $40,000. Production activity for July was as follows: Direct materials costing $28,800 were requested for production; total production-related payroll was $10,600, of which $2,600 was used to pay for indirect labor; indirect materials costing $8,400 were purchased and used; and overhead was applied at a rate of 120 percent of direct labor costs. Record Tin Hau's materials, labor, and overhead costs for July in T accounts. Compute the ending balance in the Work in Process Inventory account. Assume a transfer of $45,000 to the Finished Goods Inventory account during the period.

Explanation / Answer

ANSWER 1 :

Raw Material Cost = opening balance - used in production = 40000 - 28800 = $ 11200

Indirect Material $ 8400

Direct Labour = 10600 - 2600 =$ 8000

Overhead Cost = 120% * 8000 = $ 9600

ANSWER 2:

Ending Balance in WIP Account = Opening Balance + Direct Materials + Direct Labour + Overhead - Transfer to finished Goods account

Ending Balance = 9000+ 28800 + 8000 + 9600 - 45000 = $10400

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.