Question

XYZ Company uses normal costing. Following are various cost and inventory data for the just completed year: Sales revenue OMR440,000; Adjusted gross profit OMR175,000; Selling and admin expenses OMR145,000 ; Overapplied overhead OMR15,000 ; Prime costs OMR155,000; Work in process inventory has increased by OMR10,000 ; Finished goods inventory has decreased by OMR20,000. How much is the manufacturing overhead costs applied to work in process during the year? Select one:

a. OMR125,000

b. OMR100,000

c. OMR105,000

d. None of the answers given

e. OMR115,000

CLEAR MY CHOICE

Answer 1

Solution:

Sales revenue	440000
Less: Gross profit	175000
Adjusted Cost of Goods sold	265000
Add: Overapplied overhead	15000
Cost of goods sold	280000

Cost of goods sold	280000
Less: decrease in Finished goods inventory	20000
Cost of goods manufactured	260000
Add: Increase in Work in process inventory	10000
Total Costs added to production	270000

Total Costs added to production	270000
Less: prime costs	155000
manufacturing overhead costs applied	115000

Hence option "e" OMR115,000 is correct.