Question

# Tappan, Inc., manufactures one product and accounts for costs using a job cost system. You have...

 Tappan, Inc., manufactures one product and accounts for costs using a job cost system. You have obtained the following information from the corporation's books and records for the year ended December 31, Year 1:
 • Total manufacturing cost during the year was \$2,368,000 based on actual direct material, actual direct labor, and applied manufacturing overhead. • Manufacturing overhead was applied to work in process at 175 percent of direct labor dollars. Applied manufacturing overhead for the year was 40 percent of the total manufacturing cost during the year.

• Total Manufacturing Cost = \$ 2,368,000
• Applied Manufacturing Overhead = 40% of \$ 2,368,000
= \$ 947,200
• Manufacturing Overhead are applied at 175% of direct Labor Dollars.
Hence, Direct Labor Dollars = \$ 947,200 / 175%
= \$ 541,257
• Direct Material used = Total manufacturing cost – Applied Overheads – Direct labor cost
= 2368000 – 947200 – 541257
= \$ 879,543
 Actual Direct Material used \$879,543 Actual Direct Labor \$541,257 Applied Manufacturing Overhead \$947,200

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