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Homework answers / question archive / A) Sterling's records show the work in process inventory had a beginning balance of $5,000 and an ending balance of $4,000
A) Sterling's records show the work in process inventory had a beginning balance of $5,000 and an ending balance of $4,000. How much direct labor was incurred if the records also show:
Materials used$1,600
Overhead applied 300
Cost of goods manufactured 7,200
B) Logo Gear purchased $2,100 worth of merchandise during the month, and its monthly income statement shows cost of goods sold of $2,050. What was the beginning inventory if the ending inventory was $800?
C) A new company started production. Job 10 was completed, and Job 20 remains in production. Here is the information from job cost sheets from their first and only jobs so far:
Job 10 Hours Total Cost
Direct materials $750
Direct labor 85 1,870
Manufacturing overhead 68
Total cost $2,688
Job 20 Hours Total Cost
Direct materials $130
Direct labor 115 2,530
Manufacturing overhead 92
Total cost $2,752
What is the balance in work in process?
What is the balance in the finished goods inventory?
If manufacturing overhead is applied on the basis of direct labor hours, what is the predetermined overhead rate? Round your final answer to nearest cent.
$ Direct per hour
1) Computation of Direct Labor:
Direct Labor = Cost of Goods Manufactured + Ending Work-in-Process - Materials used - Overhead applied - Beginning Work-in-Process
= $7,200 + $4,000 - $1,600 - $300 - $5,000
Direct Labor = $4,300
2) Computation of Beginning Inventory:
Beginning inventory =Ending inventory + Cost of goods sold - Purchases
= $800+$2,050-$2,100
Beginning inventory = $750
3)
(A) Balance in Work in Process will be the total cost of job 20, as this job is not completed yet. So, balance of work in progress is $2752.
(B) Balance in finished goods inventory will be the total cost of job 10, as this job has been completed. So, balance in finished goods is $2688.
(C) Pre-determined Overhead Rate = Manufacturing overhead / Direct labor hours
Total manufacturing overhead for Job 10 & 20 = $68 + $92 = $160
Total direct labor hours for job 10 & 20 = 85 + 115 = 200
Pre-determined Overhead Rate = $160 / 200 = 0.80 per direct labor hour
