Question

The Work-in-Process inventory account of a manufacturing firm shows a balance of $3,250 at the end of an accounting period. The job cost sheets of two uncompleted jobs show charges of $510 and $310 for materials, and charges of $410 and $670 for direct labor. From this information, it appears that the company is using a predetermined overhead rate, as a percentage of direct labor costs, of:

Answer 1

$1.25

Step-by-step explanation:

With regards to the above and given that;

Direct material = $510 310

Direct labor = $410 $670

Manufacturing overhead?

Work in process = Direct material + Direct labor + manufacturing overhead

$3,250 = $820 + $1,080 + MOH

$3,250 - $1,900 = MOH

MOH = $1,350

Overhead rate = MOH/Direct labor hour

= $1,350/1080

= $1.25