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-   -   Help me find the manufacturing overhead applied (https://www.askmehelpdesk.com/showthread.php?t=447036)

  • Feb 14, 2010, 03:22 PM
    orig sweetwater
    Help me find the manufacturing overhead applied
    Direct materials 63,150
    Direct labor
    Manufacturing overhead
    Total manufacturing cost 213,000
    Work in process 1/1 18000
    Total cost of work in process 213000
    Work in process 9000
    Total of cost of goods manufactured 222,000

    How do I find the manufacturing overhead?
  • Feb 15, 2010, 06:03 PM
    morgaine300

    Something is wrong with the information.

    You have three manufacturing costs: direct materials, direct labor and overhead. All three of those will end up in the Work in Process (WIP) account.

    So the way the WIP account should work is:
    Beginning Balance
    +Total Manufacturing Costs
    = Total Cost of Work in Process
    - Cost of Goods Manufactured
    = Ending Balance

    The "Total Manufacturing Costs" are the Direct Material, Direct Labor and Overhead. "Total Cost of Goods Manufactured" is what got finished and moved onto the Finished Goods Account. So you're starting with beginning balance, adding your 3 current period manufacturing costs, which gives the total in WIP. Then less cost of goods manufactured that got moved onto Finished Goods, gives you ending balance.

    There's 3 issues here I've found. First, how can the amount of goods finished (222K) be higher than what was ever in the WIP account (213K)? That's impossible to take something out that doesn't exist. Second, how can current manufacturing costs (213K) be exactly the same as total WIP (213K) once beginning balance is added in? (That only happens when there's no beginning balance.)

    Now, my suspicions are that you just copied a number incorrectly.

    However, the third problem is that you have THREE manufacturing costs, with a total. If you had two of the three costs (or some other type of info), then you could solve for the missing one. But you have two missing ones. That's impossible to solve.

    However, if you discover you've copied something incorrectly, use the above "equation" to insert what you have and work back to what you don't have.

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