Using the following accounts and an overhead rate of 90% of direct labor cost, determine the amount of applied overhead. Work in Process Inventory Beginning WIP 17,600 Direct Materials 52,800 Direct Labor ? Applied Overhead ? To Finished Goods ? Ending WIP 36,080 Finished Goods Inventory Beginning FG 5,200 201,520 Ending FG

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andromache andromache · Answer 1 · 2020-04-18T05:15:14+02:00

Answer:

$79,200

Explanation:

The computation of the amount of applied overhead is shown below:

Let us assume

Direct labor cost = Y

Applied overhead will be = 0.9 Y (90% of Y )

As we know that

Beginning Work in process + Direct material + Direct labor + Applied overhead = Transfer to finished goods + Ending Work in process

$17,600 + $52,800 + Y + 0.9 Y = $201,520 + $36,080

$70,400 + 1.9 Y = $237,600

1.9 Y = $237,600 - $70,400

1.9 Y = $167,200

Y = $167,200 ÷ 1.9

Y = $88,000

So, Direct labor cost is $ 88,000.

Therefore the Amount of applied overhead will be

= $88,000 × 90%

= $79,200