Question

The following information is from the finanial records of Company ExCost for the year:
Total Manufacturing Costs	$           2,150,000
Cost of Goods Manufactured	$           2,075,000
Applied Factory Overhead was	25% of total manufacturing costs
Factory Overhead was applied at a rate of	80% of direct labor costs
Work-in-Process Inventory on January 1 was	75% of Work-in-Process Inventory on Dec 31
What is the carrying value of Work-in-Process Inventories on December 31:
What is the total Direct Material Costs for the Year:

Answer 1

1)
	total manufacturing cost + beginning WIP -ending WIP = cost of goods manufactured
	lets assume that the ending WIP is X
	2,150,000 + .75x -x          = 2,075,000
	.25x                                      = 2,150,000-2,075,000
	x                                  =		300000
	thus the carrying value of work in process inventory on december 31 is $300,000
2)	total manufacturing cost = direct materials + direct labor + overhead applied
		Applied overhead = 2,150,000*25%
				537500
		Applied overhead is applied at the rate of 80% of direct labor cost
		hence direct labor cost = 537500/80%
				671875
	direct materials = 2,150,000-537,500-671,875
			940625	Answer