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the work in process inventory account of a manufacturing company shows a balance of $2,400. from this information, it appears that the compnay is suing a predetermined overhead rate, as a percentageof direct labor costs, of: g

Sagot :

Answer: 125%

Explanation:

Here's the complete question:

The Work in Process inventory account of a manufacturing company shows a balance of $2,400 at the end of an accounting period. The job cost sheets of the two uncompleted jobsshow charges of $400 and $200 for direct materials, and charges of $300 and $500 for direct labor. From this information, it appears that the company is using a predetermined overhead rate, as a percentage of direct labor costs, of:

A. 80%

B. 125%

C. 300%

D. 240%

First, we have to calculate the overhead cost of the incomplete jobs. This would be:

Ending Work in process balance = $2,400

Less: Direct materials cost of uncompleted Jobs = $600

Less: Direct labor cost of uncompleted Jobs = $800

Therefore, Overhead cost of Uncompleted Jobs = $1,000

Then, the predetermined overhead rate would be calculated as:

= Overhead cost / Direct labor cost of the uncompleted Jobs

= $1000 / $800

= 1.25

= 125% of direct labor cost

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