week 7 EX3-28 - (Round your answer to the nearest dollar...

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Exercise 3-28 Cost Relationships; Normal Costing System (LO 2, 6) Herget, Inc. employs a normal costing system. The following information pertains to the year just ended. Total manufacturing costs were $2,500,000. Cost of goods manufactured was $2,250,000. Applied manufacturing overhead was 39 percent of total manufacturing costs. Manufacturing overhead was applied to production at a rate of 75 percent of direct-labor cost. Work-in-process inventory on January 1 was 26 percent of work-in-process inventory on December 31. Requirement 1: Compute Herget's total direct-labor cost for the year. (Round your answer to the nearest dollar amount. Omit the "$" sign in your response.) Direct-labor cost $ 1,300,000 Feedback:
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Applied manufacturing overhead = total manufacturing costs × 39% = $2,500,000 × 39% = $975,000 Direct-labor cost = applied manufacturing overhead ÷ 75% = $975,000 ÷ 0.75 = $1,300,000 Requirement 2: Calculate the total cost of direct material used during the year.
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Unformatted text preview: (Round your answer to the nearest dollar amount. Omit the "$" sign in your response.) Direct-material cost $ 225,000 Feedback: Direct-material cost = total manufacturing cost – direct labor cost – applied manufacturing overhead = $2,500,000 – $1,300,000 – $975,000 = $225,000 Requirement 3: Compute the value of the company's work-in-process inventory on December 31. (Round your answer to the nearest dollar amount. Omit the "$" sign in your response.) Work-in-process inventory $ 961,538 Feedback: Let X denote work-in-process inventory on December 31. Total work-in-process work-in-process cost of manufacturing + inventory, – inventory, = goods cost Jan.1 Dec. 31 manufactured $2,500,000 + 0.74 X – X = $2,250,000 0.26 X = $2,500,000 – $2,250,000 X = $961,538 Work-in-process inventory on December 31 amounted to $961,538....
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