Question

# Dacosta Corporation had only one job in process on May 1. The job had been charged...

Dacosta Corporation had only one job in process on May 1. The job had been charged with \$2,500 of direct materials, \$6,966 of direct labor, and \$10,132 of manufacturing overhead cost. The company assigns overhead cost to jobs using the predetermined overhead rate of \$19.80 per direct labor-hour.

During May, the following activity was recorded:

 Raw materials (all direct materials): Beginning balance \$ 9,200 Purchased during the month \$ 38,700 Used in production \$ 40,000 Labor: Direct labor-hours worked during the month 2,600 Direct labor cost incurred \$ 25,210 Actual manufacturing overhead costs incurred \$ 34,000 Inventories: Raw materials, May 30 ? Work in process, May 30 \$ 17,119

Work in process inventory on May 30 contains \$3,867 of direct labor cost. Raw materials consist solely of items that are classified as direct materials.

The cost of goods manufactured for May was:

Multiple Choice

• \$97,250

• \$110,740

• \$116,690

• \$119,169

#### Homework Answers

Answer #1

Computation the cost of goods manufactured is:

Cost of goods manufactured = Work in process in the beginning + Raw materials used in production + Direct labor cost incurred + Value of applied overhead - Work in process at the Ending

= \$19,598 + \$40,000 + \$25,210 + \$51,480 - \$17,119

= \$119,169

Hence, the cost of goods manufactured is \$119,169, that is, the 4th option is correct.

Working notes:

1.

Computation the work in process in the beginning is:

Work in process in the beginning = Value of direct materials + Value of direct labor + Value of manufacturing overhead

= \$2,500 + \$6,966 + \$10,132

= \$19,598

Hence, the work in process in the beginning is \$19,598.

2.

Computation the value of applied overhead is:

Value of applied overhead = Predetermined overhead rate * Number of direct labor hours

= \$19.80 * 2,600

= \$51,480

Hence, the value of applied overhead is \$51,480.

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