Question

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:

Answer 1

The amount of applied overhead is $1,000.

What is inventory?

• The products and materials that a company keeps on hand with the intention of reselling, producing, or using them are referred to as inventory or stock.
• The main focus of inventory management is determining the location and shape of stocked commodities.

What is material cost?

• The price of direct materials is directly related to the unit of production and is immediately identifiable.
• For instance, the price of glass is a direct material expense in the production of light bulbs.
• The primary component needed for the production of commodities or products was material.

Solution -

To find the amount applied overhead:

3200 - ( 1400 + 800 ) = 3200 - 2200

= $1,000

Therefore, the amount of applied overhead is $1,000.

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