Tyare Corporation had the following inventory balances at the beginning and end

Question

Tyare Corporation had the following inventory balances at the beginning and end of May: May 30 25,500 30,000 Finished Goods 75,000 66,000 Work in Process 13,500 $16,500 May 1 Raw materials During May, $58,500 in raw materials (all direct materials) were drawn from inventory and used in production. The company's predetermined overhead rate was $12 per direct labor-hour, and it paid its direct labor workers $15 per hour. A total of 300 hours of direct labor time had been expended on the jobs in the beginning Work in Process inventory account. The ending Work in Process inventory account contained $7,050 of direct materials cost. The Corporation incurred $42,000 of actual manufacturing overhead cost during the month and applied $39,600 in manufacturing overhead cost. The amount of direct labor cost in the May 30 Work in Process inventory was: Multiple Choice $4,950 $5,250 $4,200 $9,450

Explanation / Answer

Conversion costs in May 30 inventory = 16500-7050= $9450 Labor hours worked in May 30 inventory=9450/(12+15)= 350 Direct labor cost in May 30 inventory = 350*15= $5250 Option 2 is correct

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