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The Work in Process Inventory account of a manufacturing company has a $3,500 debit balance. The company applies overhead usiAdams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams

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Answer #1

Solution 1:

Applied overhead = Total cost of WIP - Direct materials - Direct labor = $3,500 - $1,580 - $860 = $1,060

Hence 3rd option is correct.

Solution 2:

Predetermined overhead rate = Estimated overhead / Estimated direct labor cost = $276,900 / $213,000 = 130% of direct labor cost

Hence first option is correct.

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