172k views
3 votes
The company applies overhead cost to jobs on the basis of direct labor-hours. For the current year, the company’s predetermined overhead rate of $14.25 per direct labor-hour was based on a cost formula that estimated $570,000 of total manufacturing overhead for an estimated activity level of 40,000 direct labor-hours. The following transactions were recorded for the year:

Raw materials were purchased on account, $634,000.
Raw materials use in production, $598,400. All of of the raw materials were used as direct materials.
The following costs were accrued for employee services: direct labor, $520,000; indirect labor, $150,000; selling and administrative salaries, $337,000.
Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $461,000.
Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $420,000.
Manufacturing overhead cost was applied to production. The company actually worked 41,000 direct labor-hours on all jobs during the year.
Jobs costing $1,645,750 to manufacture according to their job cost sheets were completed during the year.
Jobs were sold on account to customers during the year for a total of $3,360,000. The jobs cost $1,655,750 to manufacture according to their job cost sheets.
What is the total manufacturing cost added to Work in Process during the year?

1 Answer

1 vote

Answer:

$1,702,650

Step-by-step explanation:

The computation of the total manufacturing cost added to work in process is shown below:

Total manufacturing cost added to work in process

= Direct Materials + Direct Labor + Manufacturing Overhead applied

where,

Direct material $598,400

Direct labor is $520,000

And, the manufacturing overhead applied is

= Actual direct labor hours × predetermined overhead rate

= 41,000 hours × $14.25

= $584,250

So, the total manufacturing cost is

= $598,400 + $520,000 + $584,250

= $1,702,650

We simply applied the above formula

User Eulanda
by
8.1k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.