Tyare Corporation had the following inventory balances at the beginning and end of May:
During May, $58,500 in raw materials (all direct materials) were drawn from inventory and used in production. The company's predetermined overhead rate was $12 per direct labor-hour, and it paid its direct labor workers $15 per hour. A total of 300 hours of direct labor time had been expended on the jobs in the beginning Work in Process inventory account. The ending Work in Process inventory account contained $7,050 of direct materials cost. The Corporation incurred $42,000 of actual manufacturing overhead cost during the month and applied $39,600 in manufacturing overhead cost.
-The amount of direct labor cost in the May 30 Work in Process inventory was:
A) $4,200
B) $5,250
C) $4,950
D) $9,450

Question

Tyare Corporation had the following inventory balances at the beginning and end of May:
  During May, $58,500 in raw materials (all direct materials) were drawn from inventory and used in production. The company's predetermined overhead rate was $12 per direct labor-hour, and it paid its direct labor workers $15 per hour. A total of 300 hours of direct labor time had been expended on the jobs in the beginning Work in Process inventory account. The ending Work in Process inventory account contained $7,050 of direct materials cost. The Corporation incurred $42,000 of actual manufacturing overhead cost during the month and applied $39,600 in manufacturing overhead cost.
-The amount of direct labor cost in the May 30 Work in Process inventory was:
A) $4,200 
B) $5,250 
C) $4,950 
D) $9,450

Quizplus · Accepted Answer

Ending work in process inventory = Direct materials + Direct labor + Manufacturing overhead applied to work in process
$16,500 = $7,050 + $15X + $12X
$27X = $16,500 - $7,050 = $9,450
X = 350
Direct labor cost = $15 × 350 = $5,250

Tyare Corporation Had the Following Inventory Balances at the Beginning