What is Nice and Monaco like during January?

The following account balances at the beginning of January were selected from the general ledger of Sailor Man?

• 1) Actual manufacturing overhead for January amounted to $62,000. 2) Total direct labor cost for January was $57,000. 3) The predetermined manufacturing overhead rate is based on direct labor cost. The budget for the year called for $300,000 of direct labor cost and $360,000 of manufacturing overhead costs. 4) The only job unfinished on January 31 was Job No. 1002, for which total direct labor charges were $6,300 (800 direct labor hours) and total direct material charges were $12,000. 5) Cost of direct materials placed in production during January totaled $101,000. There were no indirect material requisitions during January. 6) January 31 balance in raw materials inventory was $32,000. 7) Finished goods inventory balance on January 31 was $34,500. What is the work in process inventory balance on January 31? 3) _______ A) $49,550 B) $7,560 C) $23,550 D) $25,860

• Answer:

  The answer is (D) $25,860 Job 1002 Direct material 12,000 Direct labor 6,300 Overhead applied 7,560 [6,300 x 120%*] Total WIP, January 31 25,860 360,000 / 300,000 = 120% of direct labor cost*