Question

A company's overhead rate is 60% of direct labor cost. Using the following incomplete accounts, determine the cost of direct materials used.

Goods in Process Inventory Finished Goods Inventory
Beg. bal 100,800 Beg. bal 118,200
DM? 324,800 301,000
D.L?
O.H? F.G?
End Bal. 131.040 End Bal. 142,000


Factory Overhead
93,240 90,720

Answer 1

Materials used during the period $ 113,120

Step-by-step explanation:

The credit side of the Factory overhead is the applied overhead

Thus: 90,720 os 60% of labor: 90,720 / 0.6 = 151,200

Good in Process

Beginning Balance 100,800

Materials X

Labor 151,200

Overhead 90,720

Transferred-out (Y)

Ending Balance 131,040

Finished Goods

The debit of 324,800 represents the amount transferred out from Goods in Process. Having this, we can solve for direct materials

Beginning Balance 100,800

Materials X

Labor 151,200

Overhead 90,720

Transferred-out (324,800)

Ending Balance 131,040

material = 131,040 + 324,800 - 90,720 - 151,200 - 100,800 = 113,120