Birk Co.uses a job order costing system.The following debits (credits)appeared in Birk's work-in-process account for the month of April: Birk applies overhead to production at a predetermined rate of 80% of direct labor cost.Job No.5,the only job still in process on April 30 has been charged with direct labor of $2,000.What was the amount of direct material charged to Job No.5? (CPA adapted)

Question

Quizplus · Accepted Answer

To calculate the direct material charged to Job No.5, we need to use the formula:
Direct material + Direct labor + Overhead = Total manufacturing costs

We know that the total manufacturing costs for Job No.5 is $10,000 ($6,000 + $2,000 + $2,000), and the overhead is applied at a rate of 80% of direct labor cost.

Using algebra, we can rearrange the formula as:
Direct material = Total manufacturing costs - Direct labor - Overhead
Direct material = $10,000 - $2,000 - ($2,000 x 80%)
Direct material = $5,200

Therefore, the amount of direct material charged to Job No.5 is $5,200. Therefore, the best choice is B.

Birk CoUses a Job Order Costing System