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25 November, 18:51

Tyare Corporation had the following inventory balances at the beginning and end of May:

May 1 May 30

Raw materials $ 32,500 $ 44,000

Finished Goods $ 82,000 $ 80,000

Work in Process $ 20,500 $ 17,578

During May, $65,500 in raw materials (all direct materials) were drawn from inventory and used in production. The company's predetermined overhead rate was $12 per direct labor-hour, and it paid its direct labor workers $15 per hour. A total of 440 hours of direct labor time had been expended on the jobs in the beginning Work in Process inventory account. The ending Work in Process inventory account contained $7,750 of direct materials cost. The Corporation incurred $44,100 of actual manufacturing overhead cost during the month and applied $43,800 in manufacturing overhead cost.

The amount of direct labor cost in the May 30 Work in Process inventory was:

a. $5,460

b. $9,828

c. $4,368

d. $5,020

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Answers (1)
  1. 25 November, 19:11
    0
    a. $5,460

    Explanation:

    The computation of the ending amount of direct labor cost is shown below:

    First we have to compute the direct labor hours which is

    = Ending work in process - direct materials cost

    = $17,578 - $7,750

    = $9,828

    The total per direct labor hours is

    = $12 + $15

    = $27

    So, the direct labor hours would be

    = $9,828 : $27

    = 364 hours

    So, the ending direct labor cost is

    = 364 hours * $15 per hour

    = $5,460
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