Tyare Corporation had the following inventory balances at the beginning and end of May: During May, $58,500 in raw materials (all direct materials) were drawn from inventory and used in production. The company's predetermined overhead rate was $12 per direct labor-hour, and it paid its direct labor workers $15 per hour. A total of 300 hours of direct labor time had been expended on the jobs in the beginning Work in Process inventory account. The ending Work in Process inventory account contained $7,050 of direct materials cost. The Corporation incurred $42,000 of actual manufacturing overhead cost during the month and applied $39,600 in manufacturing overhead cost.The actual direct labor-hours worked during May totaled:

A) 2,800 hours
B) 3,500 hours
C) 3,300 hours
D) 3,600 hours

Question

Tyare Corporation had the following inventory balances at the beginning and end of May:

During May, $58,500 in raw materials (all direct materials) were drawn from inventory and used in production. The company's predetermined overhead rate was $12 per direct labor-hour, and it paid its direct labor workers $15 per hour. A total of 300 hours of direct labor time had been expended on the jobs in the beginning Work in Process inventory account. The ending Work in Process inventory account contained $7,050 of direct materials cost. The Corporation incurred $42,000 of actual manufacturing overhead cost during the month and applied $39,600 in manufacturing overhead cost.The actual direct labor-hours worked during May totaled:

A) 2,800 hours
B) 3,500 hours
C) 3,300 hours
D) 3,600 hours

Sumedh Durge · Accepted Answer

Final Answer : C, Explanation :  To solve this problem, we need to use the following formula:Total manufacturing cost = Direct materials cost + Direct labor cost + Manufacturing overhead costWe can start by determining the beginning and ending balances for the Work in Process account:Beginning balance for WIP = Total manufacturing cost - Direct materials cost - Manufacturing overhead cost= ( ) - 0 - 0 = $18,900Ending balance for WIP = Total manufacturing cost - Direct materials cost - Direct labor cost - Manufacturing overhead cost= ( ) - $7,050 - (300 x $15) - $39,600 = $9,750Next, we can determine the total manufacturing cost for the month:Total manufacturing cost = Direct materials used + Direct labor cost + Manufacturing overhead cost= $58,500 + (x hours x $15 per hour) + $39,600= $58,500 + $15x + $39,600= $98,100 + $15xTo find x (the total number of direct labor hours worked), we can use the predetermined overhead rate:Manufacturing overhead cost = Predetermined overhead rate x Direct labor-hours$42,000 = $12 x Direct labor-hoursDirect labor-hours = $42,000 / $12Direct labor-hours = 3,500However, this gives us the total direct labor hours for the month, and we need to find the actual direct labor hours used for the jobs in the beginning WIP account. We can calculate this by subtracting the direct labor hours used for the ending WIP account:Direct labor hours for beginning WIP = Total direct labor hours - Direct labor hours for ending WIP= 3,500 - (Ending WIP balance / Direct labor rate)= 3,500 - ($7,050 / $15)= 3,300Therefore, the answer is C) 3,300 hours.

Definitions

Learning Objectives

Learning Objectives

Related questions