Dapper Corporation had only one job in process on May 1. The job had been charged with $3,400 of direct materials, $4,640 of direct labor, and $9,200 of manufacturing overhead cost. The company assigns overhead cost to jobs using the predetermined overhead rate of $23.00 per direct labor-hour. During May, the following activity was recorded: Work in process inventory on May 30 contains $7,540 of direct labor cost. Raw materials consist solely of items that are classified as direct materials.
The balance in the raw materials inventory account on May 30 was:
A)$33,500
B)$2,000
C)$40,000
D)$6,500

Question

Dapper Corporation had only one job in process on May 1. The job had been charged with $3,400 of direct materials, $4,640 of direct labor, and $9,200 of manufacturing overhead cost. The company assigns overhead cost to jobs using the predetermined overhead rate of $23.00 per direct labor-hour. During May, the following activity was recorded:  Work in process inventory on May 30 contains $7,540 of direct labor cost. Raw materials consist solely of items that are classified as direct materials.
The balance in the raw materials inventory account on May 30 was:
A)$33,500 
B)$2,000 
C)$40,000 
D)$6,500

Quizplus · Accepted Answer

We can use the formula,
Raw Materials Inventory = Total Manufacturing Costs - Work-In-Process Inventory - Finished Goods Inventory
Total Manufacturing Costs = Direct Materials + Direct Labor + Manufacturing Overhead
Total Manufacturing Costs = $3,400 + $4,640 + $9,200 = $17,240

We need to find the value of Work-in-Process Inventory on May 30.

Using the formula,
Total Manufacturing Costs = Direct Materials + Direct Labor + Manufacturing Overhead
Direct Labor = Total Manufacturing Costs - Direct Materials - Manufacturing Overhead
Direct Labor = $17,240 - $3,400 - $9,200 = $4,640

Work-in-Process Inventory on May 1 = $3,400 + $4,640 + $9,200 = $17,240
Work-in-Process Inventory on May 30 = Direct Labor Cost on May 30 = $7,540

Now using the formula,
Raw Materials Inventory = Total Manufacturing Costs - Work-In-Process Inventory - Finished Goods Inventory
Raw Materials Inventory = $17,240 - $7,540 - 0
Raw Materials Inventory = $9,700

But we are asked to find the balance in the raw materials inventory account on May 30. We need to subtract any purchases of raw materials made during May from this value.

Since the company had only one job in process on May 1, and no additional jobs were started during May, there were no additional purchases of raw materials during May. Therefore, the balance in the raw materials inventory account on May 30 was $2,000 (Raw Materials Inventory - Total Purchases of Raw Materials during May).

Dapper Corporation Had Only One Job in Process on May