Question

Lund Company applies manufacturing overhead to jobs using a predetermined overhead rate of 75% of direct labor cost. Any under or overapplied overhead is closed out to Cost of Goods Sold at the end of the calendar year. During March, the following transactions were recorded by the company: raw materials purchased during the moth - $27,00; raw materials used in production - $28,000; direct labor hours work during month - 2,500; direct labor cost incurred - $20,000; indirect labor cost incurred - $5,500; manufacturing overhead costs incurred - $17,000; raw material inventory, ending - $7,500; work in process inventory, beginning - $10,500; work in process inventory, ending - $14,000 (contains $5,000 of direct labor cost).The Cost of Goods Manufactured for March was:A) $66,500.B) $61,500.C) $59,500.D) $63,000.

Answer 1

Answer:

The correct answer is B= $61,500

Explanation:

Giving the following information:

Lund Company applies manufacturing overhead to jobs using a predetermined overhead rate of 75% of direct labor cost.

Any under or overapplied overhead is closed out to Cost of Goods Sold at the end of the calendar year.

During March:

Raw materials purchased= $27,00

Raw materials used in production= $28,000

Direct labor hours work= 2,500

Direct labor cost incurred= $20,000

Indirect labor cost incurred= $5,500

Manufacturing overhead costs incurred= $17,000

Raw material inventory, ending= $7,500

Work in process inventory, beginning= $10,500

Work in process inventory, ending= $14,000 (contains $5,000 of direct labor cost)

Cost of good manufactured= beginning work in process + direct material used + direct labor + manufacturing overhead - ending work in process

Cost of good manufactured= 10500 + 28000 + 20000 + 17000 - 14000= $61,500