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9 August, 08:58

The Work in Process inventory account of a manufacturing firm shows a balance of $3,000 at the end of an accounting period. The job cost sheets of the only two uncompleted jobs show charges of $500, & $300 for materials, & charges of $400 & $600 for direct labor. From this information, it appears that the company is using a predetermined overhead rate, as a percentage of direct labor costs, of:A) 83%. B) 120%. C) 40%. D) 300%

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  1. 9 August, 09:04
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    Overhead rate = 1.2

    Explanation:

    Giving the following information:

    The Work in Process inventory account of a manufacturing firm shows a balance of $3,000 at the end of an accounting period.

    Direct material = $500, & $300

    Direct labor = $400 & $600

    Manufacturing overhead = ?

    Work in process = direct material + direct labor + manufacturing overhead

    3000 = 800 + 1000 + MOH

    3000-800-1000 = MOH

    1200 = MOH

    Overhead rate = moh/direct labor

    Overhead rate = 1200/1000 = 1.2
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