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6 November, 07:18

Leelanau Corporation uses a job-order costing system. The following data are for last year: Work in process beginning balance $ 10,500 Work in process ending balance $ 19,000 Cost of goods manufactured $ 323,000 Direct materials $ 115,000 Direct Labor $ 78,000 Leelanau applies overhead using a predetermined rate. What amount of overhead was applied to work in process last year

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  1. 6 November, 10:18
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    The correct answer is $138,500.

    Explanation:

    According to the scenario, the given data are as follows:

    WIP beginning = $10,500

    WIP ending = $19,000

    Cost of goods manufactured = $323,000

    Direct material = $115,000

    Direct labor = $78,000

    So, we can calculate the amount of overhead by using following formula:

    Overheads = Total manufacturing costs - Direct materials - Direct labor

    Where, Total manufacturing cost = Cost of goods manufactured + Ending WIP - Beginning WIP

    = $323,000 + $19,000 - $10,500

    = $331,500

    So, by putting the value in the formula:

    Overheads = $331,500 - $115,000 - $78,000

    = $138,500

    Hence, the amount of overhead is $138,500.
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