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Homework answers / question archive / Sooner Company

Sooner Company

Accounting

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 

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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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