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    rocketgrrl79's Avatar
    rocketgrrl79 Posts: 1, Reputation: 1
    New Member
    		  
    #1

    May 18, 2010, 08:01 PM
    Ending Work In Process Inventory Problem
    Hi,
    I have the following problem:

    WIP Inventory
    Beg Balance 6000
    Transferred Out 122405
    Materials Added 62000
    Labour (10000DLH) 50000
    Applied Overhead 54000
    Ending Balance 23000

    Manufacturing OH is applied based on DLH. Only WIP left at the end of the month is 1240 DLH accumulated to date.

    1. What is the Predetermined Overhead Rate?
    I figure this would be solved by dividing the applied overhead by the direct labour hours left at the end of the month and my answer is... 58.39 per DLH.

    2. What is the amount of material included in EWIP Inventory?
    I take the BWIP + Materials Added - EWIP and my answer is 45000.

    3. What is the amount of labour included in EWIP Inventory?
    1240?

    4. what is the amound of overhead included in EWIP Inventory?
    I'm not sure how to calculate this...
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
    Senior Member
    		  
    #2

    May 20, 2010, 06:18 AM

    At the outset, I think the account does not balance.

    Debit side has:
    Beg Balance 6000
    Materials Added 62000
    Labour (10000DLH) 50000
    Applied Overhead 54000
    Total debits 172000

    Credit side has:
    Transferred Out 122405
    Ending Balance 23000
    Total credits 155405
    Difference 172000 - 145405 = 26595

    Now to answer your questions:
    1. What is the Predetermined Overhead Rate?
    I figure this would be solved by dividing the applied overhead by the direct labour hours left at the end of the month and my answer is... 58.39 per DLH.

    No. Applied overheads are 54000 and DLH is 100000. The rate is 0.54 per DLH

    2. What is the amount of material included in EWIP Inventory?
    I take the BWIP + Materials Added - EWIP and my answer is 45000.

    Ending WIP consists of Materials, Labor and applied overheads. Now we know that the ending WIP has 1240 direct labor hours, hence the labor cost is 1240 x 0.50 = 620 and applied overheads will be 1240 x 0.54 = 67 (rounded). The cost of materials will, therefore, be 23000-620-67 = 22313.

    3. What is the amount of labour included in EWIP Inventory?
    1240? See 2 above

    4. what is the amount of overhead included in EWIP Inventory? See above

    However, these answers are based on available information
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