Fisher Corporation uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs.The following information about Fisher Corporation's Work in Process inventory account has been provided for the month of May: During the month, Fisher Corporation's Work in Process inventory account was credited for $120,500, which represented the Cost of Goods Manufactured for the month.Only one job remained in process on May 31; this job had been charged with $9,600 of applied overhead cost.The amount of direct materials cost in the unfinished job would be:

A) $10,600
B) $16,700
C) $12,800
D) $23,400

Question

Fisher Corporation uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs.The following information about Fisher Corporation's Work in Process inventory account has been provided for the month of May:

During the month, Fisher Corporation's Work in Process inventory account was credited for $120,500, which represented the Cost of Goods Manufactured for the month.Only one job remained in process on May 31; this job had been charged with $9,600 of applied overhead cost.The amount of direct materials cost in the unfinished job would be:

A) $10,600
B) $16,700
C) $12,800
D) $23,400

Keasia Fatemi · Accepted Answer

Final Answer : A, Explanation :    Overhead applied = Predetermined overhead rate × Amount of the allocation base incurred$37,500 = Predetermined overhead rate × $50,000Predetermined overhead rate = $37,500 ÷ $50,000 = 0.75$9,600 = 0.75 × Amount of the allocation base incurred by the jobAmount of the allocation base incurred by the job = $9,600 ÷ 0.75 = $12,800Work In Process inventory = Direct materials + Direct labor + Manufacturing overhead$33,000 = Direct materials + $12,800 + $9,600Direct materials = $33,000 - ($12,800 + $9,600)= 10,600

Definitions

Learning Objectives

Learning Objectives

Related questions