Opague Corporation uses a job order costing system. The work in process inventory balance on December 31, 2009, consists of Job # 120, which has a balance of $19,000. Job # 120 has been charged with manufacturing overhead of $5,100. Opaque allocates manufacturing overhead at a predetermined rate of 85% of direct labor cost. What was the amount of direct materials charged to Job # 120?

Question

Quizplus · Accepted Answer

Given that the manufacturing overhead is allocated at 85% of direct labor cost, and Job #120 has been charged $5,100 in manufacturing overhead, we can calculate the direct labor cost as follows: $5,100 / 85% = $6,000. The total job cost is $19,000, which includes direct materials, direct labor, and manufacturing overhead. Subtracting the direct labor ($6,000) and manufacturing overhead ($5,100) from the total job cost gives us the direct materials cost: $19,000 - $6,000 - $5,100 = $7,900.

Opague Corporation Uses a Job Order Costing System