Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 11

Applying Overhead Using a Predetermined Rate

Mary’s Landscaping uses a job order cost system. The following debits (credits) appeared in Work-in-Process Inventory for August:

	Description	Amount
August 1	Balance	$ 6,250
For the month	Direct materials	40,500
For the month	Direct labor	27,000
For the month	Factory overhead	21,600
For the month	To finished goods	(81,000)

Mary’s applies overhead to production at a predetermined rate of 80 percent based on direct labor cost. Job 3318, which was started during August and is the only job still in process at the end of August, has been charged direct labor of $3,375.

Required

What cost amount of direct materials was charged to Job 3318?