Question

Work-in-Process Inventory for Wendall Productions has a balance of $2,600 at the end of the accounting period. The cost summaries for the uncompleted jobs showed direct materials of $1,200 and direct labor of $800. Wendall applies manufacturing overhead on the basis of direct labor cost. The company's predetermined overhead rate is:

A. $1.00 per direct labor dollar
B. $0.65 per direct labor dollar
C. $0.50 per direct labor dollar
D. $0.75 per direct labor dollar

Answer 1

D. $0.75 per direct labor dollar

Step-by-step explanation:

Total work in process = $2,600

- Direct materials cost = ($1,200)

- Direct labor cost = ($800)

Manufacturing overhead = $600

Predetermined overhead cost = total overhead cost / total direct labor costs = $600 / $800 = $0.75 per direct labor dollar