Dillon Corporation applies manufacturing overhead to jobs using a predetermined overhead rate of 75% of...
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Accounting
Dillon Corporation applies manufacturing overhead to jobs using a predetermined overhead rate of 75% of direct labor cost. Any under or overapplied manufacturing overhead cost is closed out to Cost of Goods Sold at the end of the month. During May, the following transactions were recorded by the company:
Raw materials (all direct materials):
Purchased during the month
$38,000
Used in production
$35,000
Labor:
Direct labor-hours worked during the month
3,150
Direct labor cost incurred
$30,000
Manufacturing overhead cost incurred (total)
$24,500
Inventories:
Raw materials (all direct), May 31
$8,000
Work in process, May 1
$9,000
Work in process, May 31
$12,000*
*Contains $4,400 in direct labor cost.
The amount of direct materials cost in the May 31 Work in Process inventory account was:
$7,600
$6,300
$2,000
$4,300
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