Dacosta Corporation had only one job in process on May 1. The job had been charged with $2,100 of direct materials, $6,966 of direct labor, and $10,020 of manufacturing overhead cost. The company assigns overhead cost to jobs using the predetermined overhead rate of $19.00 per direct labor-hour.During May, the following activity was recorded: Work in process inventory on May 30 contains $3,795 of direct labor cost. Raw materials consist solely of items that are classified as direct materials.The cost of goods manufactured for May was:

A) $97,170
B) $110,660
C) $106,210
D) $108,281

Question

Dacosta Corporation had only one job in process on May 1. The job had been charged with $2,100 of direct materials, $6,966 of direct labor, and $10,020 of manufacturing overhead cost. The company assigns overhead cost to jobs using the predetermined overhead rate of $19.00 per direct labor-hour.During May, the following activity was recorded:

Work in process inventory on May 30 contains $3,795 of direct labor cost. Raw materials consist solely of items that are classified as direct materials.The cost of goods manufactured for May was:

A) $97,170
B) $110,660
C) $106,210
D) $108,281

Sydney Thompson · Accepted Answer

Final Answer : D, Explanation :  Using the formula:Total manufacturing cost = Direct materials + Direct labor + Manufacturing overheadTotal manufacturing cost = $2,100 + $6,966 + $10,020 = $19,086Predetermined overhead rate = Manufacturing overhead / Direct labor hours$19.00 = $10,020 / Direct labor hoursDirect labor hours = $10,020 / $19.00 = 527.37During May, direct labor cost was $3,795, which is equivalent to 199.74 direct labor hours (assuming the same labor rate as in May 1).Total direct labor hours = 527.37 + 199.74 = 727.11Manufacturing overhead applied to the job in May = Direct labor hours x Predetermined overhead rateManufacturing overhead applied to the job in May = 727.11 x $19.00 = $13,814.09Total cost of the job = $19,086 + $13,814.09 = $32,900.09Cost of goods manufactured = Total cost of the job + Beginning work in process inventory - Ending work in process inventoryCost of goods manufactured = $32,900.09 + $0 - $3,795 = $29,105.09Therefore, the answer is D) $108,281

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