Worrell Corporation has a job-order costing system.The following debits (credits)appeared in the Work in Process account for the month of March:
Worrell applies overhead at a predetermined rate of 90% of direct labour cost.Job No.232,the only job still in process at the end of March,has been charged with manufacturing overhead of $2,250.What was the amount of direct materials charged to Job No.232?

Question

Worrell Corporation has a job-order costing system.The following debits (credits)appeared in the Work in Process account for the month of March: 
Worrell applies overhead at a predetermined rate of 90% of direct labour cost.Job No.232,the only job still in process at the end of March,has been charged with manufacturing overhead of $2,250.What was the amount of direct materials charged to Job No.232?

Quizplus · Accepted Answer

To calculate the direct materials charged to Job No.232, we need to use the formula:

Total manufacturing costs = Direct materials + Direct labor + Manufacturing overhead

We know that the job has been charged with manufacturing overhead of $2,250 and the predetermined overhead rate is 90% of direct labor cost. We also know that Job No. 232 is the only job still in process at the end of March. Therefore, all the debits (credits) in the Work in Process account for the month of March should be allocated to Job No. 232.

From the given data in the table, the total manufacturing costs for the month of March are: $9,000 ($1,500 + $5,000 + $2,500).

Using the formula above, we can calculate the direct materials charged to Job No.232 as follows:

Direct materials = Total manufacturing costs - Direct labor - Manufacturing overhead
Direct materials = $9,000 - $5,000 - $2,250
Direct materials = $1,750

Therefore, the correct answer is C) $4,250.

Worrell Corporation Has a Job-Order Costing System