Question

Spencer inc. applies overhead to production at a predetermined rate of 80% based on direct labor cost. job no. 130, the only job still in process at the end of august, has been charged with manufacturing overhead of $5,000. what was the amount of direct materials charged to job 130 assuming the balance in work in process inventory is $20,000?

Answer 1

To find the amount of direct materials charged to job 130, we divide the manufacturing overhead by the predetermined overhead rate and then multiply it by the percentage of the direct labor cost assumed to be the direct materials cost.

Step-by-step explanation:

In order to find the amount of direct materials charged to job 130, we need to use the predetermined overhead rate. The predetermined overhead rate is 80% based on direct labor cost. Therefore, if we know that the manufacturing overhead charged to job 130 is $5,000, we can calculate the direct labor cost for job 130 by dividing the manufacturing overhead by the predetermined overhead rate:

Direct Labor Cost = Manufacturing Overhead / Predetermined Overhead Rate

Direct Labor Cost = $5,000 / 0.80
Direct Labor Cost = $6,250

Now, we can assume that the direct materials cost is a certain percentage of the direct labor cost. Let's assume the direct materials cost is 60% of the direct labor cost:

Direct Materials Cost = Direct Labor Cost * Percentage

Direct Materials Cost = $6,250 * 0.60
Direct Materials Cost = $3,750

Therefore, the amount of direct materials charged to job 130 is $3,750.

Answer 2

The amount of the direct materials which are charged to job 130 and assuming that the balance in work in process inventory is $20,000 is $14,800. The answer to the following question that was stated is $14,800 and that is the amount of the direct materials.