Question

Mary's applies overhead to production at a predetermined rate of 75 percent based on direct labor cost. Job 3318, which was started during August and is the only job still in process at the end of August, has been charged direct labor of $6,500.

Description Amount
August 1 Balance $ 13,900
For the month Direct materials 81,100
For the month Direct labor 54,900
For the month Factory overhead 41,175
For the month To finished goods(160,300)

Required:

What cost amount of direct materials was charged to Job 3318?

Answer 1

The cost amount of direct materials charged to Job 3318 is $19400 as shown below.

Step-by-step explanation:

In order to determine the amount of direct materials charged to Job 3318,the total costs of Job 3318 must for of all determined.The total costs is the sum of direct materials,direct labor costs and overhead consumed by Job 3318.

The formula below showing below ending month balance of work-in process represents the total costs incurred on Job 3318 as it is only left in process at month end:

Opening work-in-process+transfers in-Transfers out(finished goods=Ending work-in-process

=$13900+$81100+$54900+$41175-$160300=$30775

Hence total costs of Job 3318=$30775

Labor costs on the job is $6500

Overhead cost is 75% of labor costs=$6500*0.75=$4875

Direct material+direct labor +overhead=$30775

where direct material is unknown

$6500+$4875+direct material=$30775

Direct material =$30775-$11375

Direct material=$19400