Leelanau Corporation uses a job-order costing system. The following data are for last year: Work in process beginning balance $ 10,500 Work in process ending balance $ 19,000 Cost of goods manufactured $ 323,000 Direct materials $ 115,000 Direct Labor $ 78,000 Leelanau applies overhead using a predetermined rate. What amount of overhead was applied to work in process last year

The correct answer is $138,500.

Explanation:

According to the scenario, the given data are as follows:

WIP beginning = $10,500

WIP ending = $19,000

Cost of goods manufactured = $323,000

Direct material = $115,000

Direct labor = $78,000

So, we can calculate the amount of overhead by using following formula:

Overheads = Total manufacturing costs - Direct materials - Direct labor

Where, Total manufacturing cost = Cost of goods manufactured + Ending WIP - Beginning WIP

= $323,000 + $19,000 - $10,500

= $331,500

So, by putting the value in the formula:

Overheads = $331,500 - $115,000 - $78,000

= $138,500

Hence, the amount of overhead is $138,500.

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