Question

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

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

Finished Goods Inventory
Beginning FG	5,300
Cost of Goods Mfg'd	213,300

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.

Answer 1

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