The Work in Process inventory account of a manufacturing company shows a balance of $18,000 at the end of an accounting period.The job cost sheets of the two uncompleted jobs show charges of $6,000 and $3,000 for materials,and charges of $4,000 and $2,000 for direct labor.From this information,it appears that the company is using a predetermined overhead rate,as a percentage of direct labor costs,of:

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Quizplus · Accepted Answer

Work in process = Direct materials + Direct labor + Manufacturing overhead applied
$18,000 = ($6,000 + $3,000) + ($4,000 + $2,000) + Manufacturing overhead applied
=> Manufacturing overhead applied = $18,000 - ($6,000 + $3,000) - ($4,000 + $2,000) = $3,000
Manufacturing overhead applied = Predetermined overhead rate F1F1F1S1F1F1F10 Direct labor costs
$3,000 = Predetermined overhead rate F1F1F1S1F1F1F10 ($4,000 + $2,000)
=> Predetermined overhead rate = $3,000 F1F1F1S1F1F1F10 $6,000 = 50%

The Work in Process Inventory Account of a Manufacturing Company