Question

Brendal Corporation is a manufacturer that uses job-order costing. The company has supplied the following data for the just completed year: Estimated total manufacturing overhead at the beginning of the year $693,000 Estimated direct labor-hours at the beginning of the year 42,000 direct labor-hours Results of operations: Raw materials (all direct) requisitioned for use in production $ 525,000 Direct labor cost $ 690,000 Actual direct labor-hours 49,000 direct labor-hours Manufacturing Overhead Indirect labor cost $ 138,000 Other manufacturing overhead costs incurred $ 506,000 How much is the total manufacturing cost added to Work in Process during the year?

Answer 1

Answer:

How much is the total manufacturing cost added to Work in Process during the year?

Raw materials                                        $ 525,000

Direct labor cost                                    $ 690,000

Applied Manufacturing Overheads    $ 808,500

Total Manufacturing Costs                  $ 2,023,500

Thus total manufacturing cost added to Work in Process during the year is $ 2,023,500

Explanation:

Manufacturing cost = Direct Materials + Direct Labor + Overheads

Overheads included in Manufacturing Costs must be those Applied instead of Actual

Budgeted Overhead Rate = Budgeted Overheads/Budgeted Activity

                                           = $693,000/42,000

                                           = $16.50/hour

Applied overheads = Actual Direct labour hours × Budgeted Overhead Rate

                                = 49,000 × $16.50

                                = $808,500