The direct labor rate for Brent Corporation is $9.00 per hour, and manufacturing overhead is applied to products using a predetermined overhead rate of $6.00 per direct labor-hour. During May, the company purchased $60,000 in raw materials (all direct materials) and worked 3,200 direct labor-hours. The Raw Materials inventory (all direct materials) decreased by $3,000 between the beginning and end of May. The Work in Process inventory on May 1 consisted of one job which had been charged with $4,000 in direct materials and on which 300 hours of direct labor time had been worked. There was no Work in Process inventory on May 31. The balance in the Work in Process inventory account on May 1 was:
A)$0
B)$6,700
C)$4,500
D)$8,500

Question

Quizplus · Accepted Answer

The balance in the Work in Process inventory account on May 1 includes the direct materials and direct labor costs for the job in progress. Direct materials cost $4,000, and direct labor cost is 300 hours x $9.00/hour = $2,700. The manufacturing overhead applied is 300 hours x $6.00/hour = $1,800. Therefore, the total balance is $4,000 + $2,700 + $1,800 = $8,500.

The Direct Labor Rate for Brent Corporation Is $9