The Work in Process Inventory account of a manufacturing company has a $3,200 debit balance.The company applies overhead using direct labor cost.The cost sheet of the only job still in process shows direct material cost of $1,400 and direct labor cost of $800.Therefore,the amount of applied overhead is:
A)$1,800.
B)$2,200.
C)$1,000.
D)$800.
E)$2,400.

Question

Quizplus · Accepted Answer

The applied overhead is not directly given, but since the Work in Process Inventory has a debit balance of $3,200 and consists of direct material cost ($1,400) and direct labor cost ($800), the remainder must be the applied overhead. Thus, $3,200 (total WIP) - $1,400 (materials) - $800 (labor) = $1,000 (applied overhead).

The Work in Process Inventory Account of a Manufacturing Company