The predetermined overhead rate for neutronics, inc. is 70% of direct labor cost. the company incurs $250,000 of factory labor costs during the month and $180,000 of that cost is direct labor and $70,000 is indirect labor. actual overhead incurred was $130,000. what should be the amount of overhead debited to work in process inventory?

Question

Business

Jacklyn

29 July, 04:26

The predetermined overhead rate for neutronics, inc. is 70% of direct labor cost. the company incurs $250,000 of factory labor costs during the month and $180,000 of that cost is direct labor and $70,000 is indirect labor. actual overhead incurred was $130,000. what should be the amount of overhead debited to work in process inventory?

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Answers (1)

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Julia Murillo · Answer 1

Direct labor cost = $180,000

Indirect labor cost = $70,000

Labor cost = $250,000

Solution:

Amount to be debited = Direct labor cost * 70%

Amount to be debited = $180,000 * 70% = $126,000

So, the amount to be debited to work in progress inventory is $126,000