Lucas Co. has a job order cost system. For the month of April, the following debits (credits) appeared in the general ledger account, work-in-process:

April
1 Balance $24,000
30 Direct materials 80,000
30 Direct labor 60,000
30 Factory overhead 54,000
30 To finished goods (200,000)
Lucas applies overhead to production at a predetermined rate of 90% based on direct labor cost. Job No. 100, the only job still in process at the end of April, has been charged with factory overhead of $4,500. The amount of direct materials charged to Job No. 100 was

A) $4,500.
B) $18,000.
C) $5,000.
D) $8,500.

D) $8,500

Explanation:

The first step is to determine the total cost of manufacturing of the Job number 100 as follows:

Work in Progress Account

Balance                    $24,000              Finshed goods        $200,000

Dir. Material              $80,000              Balance                     $18,000

Dir. Labour                $60,000

Factory Overhead     $54,000                                                          

                                   218,000                                                   $218,000

Based on the calculation, the $18,000 represents the total cost of maufacturing of Job number 100 on the 30th of April.

As such

The Direct material cost charged to the job is as follows

Total Cost of maunfacturing           $18,000

subtract: Applied overhead            $4,500

Subtract  Direct Labour Cost:          $5,000 (4500 x 100/80)

Drect material charged is               $8,500

answer; the above statement/question is ( true);

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