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6 April, 09:29

Denver company uses a job costing system. The work in process inventory on december 31 consisted of job no. 173 with a balance of $66,200. Job no. 173 has been charged with manufacturing overhead costs of $20,000. Denver allocates manufacturing overhead costs at a rate of 50% of direct labor cost. What was the amount of direct materials charged to job no. 173?

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  1. 6 April, 12:31
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    Calculation of amount of direct materials charged to job no. 173:

    It is given that the work in process inventory on December 31 consisted of job no. 173 with a balance of $66,200.

    Job no. 173 has been charged with manufacturing overhead costs of $20,000. Denver allocates manufacturing overhead costs at a rate of 50% of direct labor cost. It means the direct labor cost would be 20,000/50% = $40,000

    Now we can calculate the amount of direct materials charged to job no. 173 as follows:

    Direct material Cost = Total Cost allocated to Job - Direct Labor Cost - Manufacturing Overhead Cost

    = 66200-40000-20000

    = 6200

    Hence, the amount of direct materials charged to job no. 173 is $6,200
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