Question

The Work in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $3,850 debit balance after all posting is completed. The cost sheet of the one job still in process shows direct material cost of $1,790 and direct labor cost of $770. Therefore, the amount of the applied overhead is: Multiple Choice $2,060. $2,560. $1,290. $770. $3,080.

Answer 1

$1,290

Step-by-step explanation:

The work in process inventory account balance is given by the sum of the direct material cost, direct labor cost and the amount of applied overhead.

If the balance is $3,850, with material cost of $1,790 and direct labor cost of $770, the applied overhead is:

`O = \$3,850 - \$1,790 - \$770\\O=\$1,290`

The amount of the applied overhead is $1,290.