Use the Information Below to Answer the Following Question(s) $\quad$

question 43

Multiple Choice

Use the information below to answer the following question(s) .

The following account balances at the beginning of January were selected from the general ledger of Sailor Manufacturing Company:

Work in process inventory $\quad$$\quad$ $0
Raw materials inventory $\quad$$\quad$ $26,000
Finished goods inventory $\quad$$\quad$ $46,000

Additional data:
1) Actual manufacturing overhead for January amounted to $62,000.
2) Total direct labour cost for January was $57,000.
3) The predetermined manufacturing overhead rate is based on direct labour cost. The budget for the year called for $300,000 of direct labour cost and $360,000 of manufacturing overhead costs.
4) The only job unfinished on January 31 was Job No. 1002, for which total direct labour charges were $6,300 (800 direct labour hours) and total direct material charges were $12,000.
5) Cost of direct materials placed in production during January totaled $101,000.
6) January 31 balance in raw materials inventory was $32,000.
7) Finished goods inventory balance on January 31 was $34,500.

-What is the predetermined manufacturing overhead rate at Sailor Manufacturing Company?

• A) 57%
• B) 83%
• C) 108%
• D) 120%

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Definitions:

Weighted-Average Method

A costing method that assigns inventory and cost of goods sold values based on an average of the costs of all goods available for sale during the period, weighted by quantity.

Conversion Costs

refers to the combined costs of direct labor and manufacturing overhead expenses in the production process, essential for transforming materials into finished goods.

Materials

The physical components or supplies used in the production of goods and services.

Conversion Costs

The costs associated with converting raw materials into finished goods, including labor and overhead but excluding the cost of the raw materials themselves.