Question

Selected accounts with amounts omitted are as follows

Work in Process
Aug. 1	Balance	252,230	Aug. 31	Goods finished	134,930
31	Direct materials	X
31	Direct labor	37,200
31	Factory overhead	X

Factory Overhead
Aug. 1 – 31	Costs incurred	112,620	Aug. 1	Balance	12,310
			31	Applied
				(30% of direct labor cost)	X

If the balance of Work in Process on August 31 is $192,870, what was the amount debited to Work in Process for direct materials in August?

a.$96,560

b.$27,210

c.$482,300

d.$347,370

Answer 1

Solution:

As per the information given in the question we have

Direct Labor = $ 37,200

Applied Factory overhead = 30 % of Direct labor cost

= 30 % * $ 37,200

= $ 11,160

Thus Factory overhead applied in August = $ 11,160

Calculation of the amount debited to Work in Process for direct materials in August :

Sl.No.	Particulars	Amount
1	Closing Balance of work in progress – Aug 31	$ 192,870
2	Goods finished	$ 134,930
3	Total of Credit side of Work in process account = (1) + (2)	$ 327,800
4	Less : Opening Balance of work in progress – Aug 31	- $ 252,230
5	Less : Direct Labor	- $ 37,200
6	Less : Factory Overhead applied	- $ 11,160
7	Direct Materials debited to Work in process for August = (3) - (4) - (5) - (6) (This is the balancing figure of the account)	$ 27,210

Thus the amount debited to Work in Process for direct materials in August = $ 27,210

The solution is Option b. $ 27,210