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Using the following accounts and an overhead rate of 90% of direct labor cost, determine the...

Using the following accounts and an overhead rate of 90% of direct labor cost, determine the amount of applied overhead. Work in Process Inventory Beginning WIP 20,900 Direct Materials 62,700 Direct Labor ? Applied Overhead ? To Finished Goods ? Ending WIP 42,900 Finished Goods Inventory Beginning FG 5,900 209,800 Ending FG

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Answer #1
Applied Overhead = 90% of Direct labor cost
Let Direct labor cost be x
Then applied overheads would be = 90% of x or 0.9x
Beginning WIP + Direct Material + Direct labor + Applied overheads = Ending WIP + Ending Finished goods
$20900 + $62700 + x + 0.9x = $42900 + $209800
1.9x = $169100
x = $89000
Therefore,
Direct labor cost = $89,000
Applied Overhead = 90% of Direct labor cost
= 90% X $89000
= $80,100
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