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Billy Baroo Company uses a job order cost system. The following information was found in the...

Billy Baroo Company uses a job order cost system. The following information was found in the Work-in-Process account for the month of July.

Date Description Amount [DR. or (CR.)]
July 1 Balance $12,000
July 31 Direct labor 38,000
July 31 Direct materials 52,000
July 31 Factory overhead 30,400
July 31 Transfer to finished goods (80,000 )

Billy Baroo applies overhead to production at a predetermined rate of 80% based on the direct labor cost. Job #23, the only job still in process at the end of July, has been charged with direct labor of $12,000. Direct material charged to Job #23 was:

Multiple Choice

  • $40,400.

  • $30,800.

  • $52,400.

  • $22,560.

Business   Accounting   
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Homework Answers

Answer #1

Predetermined rate = 80% based on the direct labor cost

Direct labor cost of job 23 = $12,000

Overheads applied to job 23 = Direct labor cost of job 23 x Predetermined rate

= 12,000 x 80%

= $9,600

Direct material charged to Job #23 = ?

Date Description Amount [DR. or (CR.)]
July 1 Balance $12,000
July 31 Direct labor 38,000
July 31 Direct materials 52,000
July 31 Factory overhead 30,400
July 31 Transfer to finished goods (80,000)
July 31 Work in process (ending) 52,400

Work in process (ending) =  Direct material charged to Job #23 + Direct labor cost of job 23 + Overheads applied to job 23

52,400 = Direct material charged to Job #23 + 12,000 + 9,600

Direct material charged to Job #23 = $30,800

Second option is correct

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