Killian Corporation began operations on January 1. The predetermined overhead rate was set at $6.00 per direct labor-hour. Debits to Work in Process for the year totaled $550,000. Credits to Work in Process totaled $480,000. Analysis of the Corporation's records indicate that direct labor cost totaled $250,000 for the year, which represents 20,000 direct labor-hours. The direct materials used in production during the year totaled:
A)$180,000
B)$240,000
C)$130,000
D)$120,000

Question

Quizplus · Accepted Answer

The total debits to Work in Process include direct materials, direct labor, and applied overhead. Given that direct labor cost is $250,000 and overhead is $6.00 per direct labor-hour for 20,000 hours (totaling $120,000), the direct materials used can be calculated as $550,000 (total debits) - $250,000 (direct labor) - $120,000 (overhead) = $180,000.

Killian Corporation Began Operations on January 1