A company\'s overhead rate is 200% of direct labor cost. Using the following inc

Question

A company's overhead rate is 200% of direct labor cost. Using the following incomplete accounts, determine the cost of direct materials used.

Work in Process Inventory

Beginning WIP   62,000                 

Direct Materials ?                            

Direct Labor        ?                            

Applied Overhead           ?                            

To Finished Goods                                          ?

Ending WIP         72,000                 

Factory Overhead

150,000                 152,000

Finished Goods Inventory

Beginning FG     52,000                 

                277,000                                282,000

Ending FG            47,000                 

Multiple Choice

$59,000.

$282,000.

$292,000.

$277,000.

$148,000

Explanation / Answer

Cost of goods manufactured = 277000 Current manufacturing costs = 287000-62000+72000 = 287000 Direct materials used = 287000-152000-(152000/200%)= 59000 Option 1 is correct

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