Question

The accounting records of Omar Company contained the following information for last year:

Beginning

Ending

Direct materials inventory........................

$9,000

$7,000

Work in process inventory.......................

$17,000

$31,000

Finished goods inventory........................

$10,000

$15,000

Manufacturing costs incurred

Direct materials used...............................

$72,000

Overhead applied.....................................

$24,000

Direct labor cost (10,000 hours)..............

$80,000

Depreciation.............................................

$10,000

Rent.........................................................

$12,000

Taxes........................................................

$8,000

Cost of goods sold...................................

$157,000*

*

Selling and administrative costs incurred

Advertising..............................................

$35,000

Rent.........................................................

$20,000

Clerical.....................................................

$25,000

3. If Omar Company applies overhead to jobs on the basis of direct labor hours and Job 3 took 120 hours, how much overhead should be applied to that job?

$528
$960
$360
$288
4. The cost of goods manufactured for the year (prior to any under/over-applied adjustments) was:

$135,000
$190,000
$162,000
$168,000

Answer 1

1) the correct answer is D= $288

2) the correct answer is= $162000

Step-by-step explanation:

A)

Overhead applied during the whole year:

$24,000

Direct hours= 10000

Unitary overhead= 24000/10000= $2,4hour

Job 3 took 120 hours

Over head= 120*2,4= $288

B)

To calculate the cost of manufactured goods we need to use the following formula:

Cost of good manufactured= Beginning work in progress+ direct materials of the period + direct labor + manufactured overhead - ending work in progress

Beginning work in progress= $17000

Direct materials = 72000

Direct labor= 80000

Manufactured overhead=24000

Ending work in progress= 31000

Cost of good manufactured= 17000+72000+80000+24000-31000= $162000