2) Finished goods inventory is $191,000. If overhead applied to these goods is $

Question

2) Finished goods inventory is $191,000. If overhead applied to these goods is $75,000, and the overhead rate is 120% of direct labor, how much direct materials cost was incurred in producing the inventory? (Round your intermediate calculations and final answer to nearest whole dollar.)

A) $90,000.
B) $62,500.
C) $53,500.
D) $51,500.
E) $26,000.

4) Austin Company uses a job order cost accounting system. The company's executives estimated that direct labor would be $2,990,000 (230,000 hours at $13/hour) and that factory overhead would be $1,530,000 for the current period. At the end of the period, the records show that there had been 210,000 hours of direct labor and $1,230,000 of actual overhead costs. Using direct labor hours as a base, what was the predetermined overhead allocation rate? (Round your answer to two decimal places.)

A) $6.65 per direct labor hour.
B) $7.29 per direct labor hour.
C) $6.02 per direct labor hour.
D) $5.35 per direct labor hour.
E) $6.43 per direct labor hour.

7) Using the following accounts and an overhead rate of 150% of direct labor cost, compute the amount of applied overhead.

  Goods in Process Inventory

   Beg. Bal. 36,100  
   D.M.        57,100        
   D.L.            ?        
   O.H.           ?        F.G.   213,300
  End.Bal.   26,100        

  Finished Goods Inventory
   Beg. Bal.   5,900      
   End. Bal.   213,300        

A) $93,200.
B) $87,720.
C) $58,480.
D) $85,650.
E) $146,200.

8) The R&R Company's production costs for August are: direct labor, $14,000; indirect labor, $6,200; direct materials, $14,600; property taxes on production equipment, $820; heat, lights and power, $960; and insurance on plant and equipment, $160. R&R Company's factory overhead incurred for August is:

A) $8,140.
B) $6,200.
C) $36,740.
D) $20,800.
E) $1,940.

Explanation / Answer

2)

Correct answer is $53,500 ( C )

Overheads Applied is $75,000 which is equals to 120% of Direct labour

Direct Labour = $75,000 / 120% = $62,500

Cost of Finished Goods Inventory = Cost of Direct Material + Direct Labour + Manufacturing Overheads

$191,000 = Direct Material + $62,500 + $75,000

Direct Material = $53,500

4)

Correct Answer is $6.65 per direct labor hour (A)

Direct Labour = $2,990,000

Factory Overhead = $1,530,000

Predetermined Overhead Allocation Rate = Estimated Factory Overhead / Estimated Direct Labour Hours = $1,530,000 / 230,000 = $6.62

7) -- Data is not clear.

8)

Correct Answer is $8,140 (A)

Factory Overheads include indirect labour cost, power, insurance on plant and equipment and property taxes on production equipment.

Factory Overheads = $6200 + $820 + $960 + $160 = $8140

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