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Sooner Company
Sooner Company. uses a job-order costing system. During May, the following costs appeared in the Work in Process Inventory account:
Beginning balance $ 30,000 Direct material used 90,000 Direct labor incurred 75,000 Applied overhead 52,500 Cost of goods manufactured 225,000
Sooner Company applies overhead on the basis of direct labor cost. There was only one job left in Work in Process s the end of May which contained $6,300 of overhead. What amount of direct material was included in this job? A. $ 7,200B. $ 9,000, $11,160D. $11,790
Expert Solution
Answer
A .
Explanation
Computation of Predetermined Overhead Rate:
Predetermined Overhead Rate = Overhead Applied/Direct Labor
= 52,500/75,000
= 70%
| Computation of Amount of Direct Material: | |
| Particulars | Amount |
| Beginning Balance of Work-in-Proces | 30000 |
| Direct Materials | 90000 |
| Direct Labor | 75000 |
| Overhead Applied | 52500 |
| Total Manufacturing Cost | 247500 |
| Cost of Goods Manufactured | 225000 |
| Ending Work in Process | 22500 |
| Overhead | -6300 |
| Labor (6300/70%) | -9000 |
| Direct Material | 7200 |
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