4/ Using the following accounts and an overhead rate of 150% of direct labor cos

Question

4/ Using the following accounts and an overhead rate of 150% of direct labor cost, compute the amount of applied overhead.

Multiple Choice

$90,800.

$83,250.

$147,800.

$59,120.

$88,680.

5/ The B&T Company's production costs for May are: direct labor, $19,000; indirect labor, $7,100; direct materials, $15,600; property taxes on production facility, $860; factory heat, lights and power, $1,060; and insurance on plant and equipment, $260. B&T Company's factory overhead incurred for May is:

Multiple Choice

$22,700.

$43,880.

$9,280.

$7,100.

$2,180.

6/ Lowden Company has an overhead application rate of 158% and allocates overhead based on direct material cost. During the current period, direct labor cost is $68,000 and direct materials used cost $72,000. Determine the amount of overhead Lowden Company should record in the current period.

Multiple Choice

$43,038.

$72,000.

$113,760.

$45,570.

$68,000.

7/ Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $226,800 of raw materials on credit; issued materials to production of $219,000 of which $37,200 were indirect. Minstrel incurred a factory payroll of $164,400, of which $47,200 was indirect labor. Minstrel uses a predetermined overhead application rate of 150% of direct labor cost. Minstrel's beginning and ending Work in Process Inventory are $17,900 and $31,800 respectively. Compute the cost of product transferred to Finished Goods Inventory:

Multiple Choice

$628,100.

$495,200.

$463,400.

$460,900.

$465,400.

Work in Process Inventory Beginning WIP 35,300 Direct materials 55,500 Direct labor ? Factory Overhead ? To Finished Goods 213,300 Ending WIP 25,300

Explanation / Answer

4.

Given:

Factory overhead = 150% of direct labor cost i.e. 1.5 Direct labor cost

Solution:

Cost of Goods Mfg’d = Beginning WIP + Direct labor + Raw material + Factory overhead –Ending WIP

213,300 = 35,300+ Direct labor +55,500 +1.5 Direct labor – 25,300

2.5 Direct labor = 213,300+25,300-35,300-55,500

Direct labor = 147,800/2.5 = $59,120

Applied overhead= 59,120 *1.5 = $88,680

5.

Amount of Factory overhead incurred

Indirect Labor

7,100

Property taxes on production facility

860

Factory heat, lights and power

1,060

Insurance on plant and equipment

260

Total Factory Overhead

9,280

6.

Overhead application cost =158% of direct materials cost

Direct materials cost = $72,000

Applied overhead = $72,000*158% = $113,760

7.

Direct Materials used in production (219,000 – 37,200)

$181,800

Direct labor cost (164,400 – 47,200)

$117,200

Factory Overhead (117,200*150%)

$175,800

Beginning Work in Process

$17,900

Less: Ending Work in Process

$(31,800)

Cost of product transferred to Finished goods inventory

$460,900

Indirect Labor

7,100

Property taxes on production facility

860

Factory heat, lights and power

1,060

Insurance on plant and equipment

260

Total Factory Overhead

9,280

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