Question

Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation requisitioned $2,500 of direct materials and used $4,000 of direct labor. The job was not finished by the end of the month, but needed an additional $3,000 of direct materials and additional direct labor of $6,500 to finish the job in October. The company applies overhead at the end of each month at a rate of 200% of the direct labor cost incurred. What is the balance in the Work in Process account at the end of September relative to Job A3B?

a) $11,500

b) $5,500

c) $14,500

d) $9,500

e) $6,500

Answer 1

c) $14,500

				Job A3B
	Direct Materials			$       2,500
	Direct Labor			$       4,000
	Overhead			$       8,000
	Total			$     14,500
	So, Balance in work in process at the end of September is						$ 14,500
	Working:
	Overhead applied		=	Direct Labor costs x 200%
			=	$       4,000	x	200%
			=	$       8,000
	Costs to be incurred in october is not included in Work in process balance in September.