The work in process inventory account of a manufacturing firm shows a balance of

Question

The work in process inventory account of a manufacturing firm shows a balance of $3,000 at the end of the accounting period. The job cost sheets of two incomplete jobs show charges of $500 and $300 for materials, and charges of $400 and $600 for direct labor. From this information, it appears that the company is using a predetermined overhead application rate as a percentage of labor costs of The following debits (credits) appeared in Axe Company's work in process inventory account for the month of March: The predetermined overhead rate for manufacturing overhead for Mansfield Corporation was $8.00 per direct labor hour. The estimated labor rate was $10.00 per hour. If the estimated direct labor cost was, $150,000, what was the estimated manufacturing overhead?

Explanation / Answer

      6.00 Details Job 1 Job 2 Total WIP balance           3,000.00 Materials               500.00           300.00              800.00 Direct Labor               400.00           600.00           1,000.00 Overhead( Balance amt )           1,200.00 So Over head is 120% of Direct labor, So predetermined overhead is 120% of Direct labor cost. Option b is correct.    15.00 Estimated Direct labor cost      150,000.00 Estimated Direct Labor rate per hr=                 10.00 Estimated direct labor hrs=150000/10=         15,000.00 Predetrmined OH rate =$8 per Direct labor hour So estimated manufacturing OH=15000*8=      120,000.00 So option c is correct.

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