Davy Company had a beginning work in process inventory balance of $32,000. During the year, $54,500 of direct materials was placed into production. Direct labor was $63,400, and indirect labor was $19,500. Manufacturing overhead is applied at 125% of direct labor costs. Actual manufacturing overhead was $86,500, and jobs costing $225,000 were completed during the year. What is the ending work in process inventory balance

Explanation:

Davy Company    

Ending Work in process inventory:  

Beginning Work in process inventory       $32,000

Materials placed in production      $54,500  

Direct Labor      $63,400  

Manufacturing Overhead applied      $79,250 [125% of $63,400]

Total cost of work in process  $229,150 [add up all of the above numbers]  

Less: Jobs completed during the year  $225,000

Ending Work in process inventory         $4,150

the correct answer is b.)