May I know how to calculate the applied manufacturing overhead? Here I got 6,000 but there will be a negative balance in work in process inventory.

My calculation :

• Applied Overhead for November

Budgeted Direct Labour Hours = Budgeted Direct Labour/ Cost Per Hour

= 960,000/ 20

= 48,000 hours

Predetermined Overhead Rate = Budgeted Overhead/ Budgeted Direct labor hours

= 72,000/ 48,000

=1.5

Direct Labour Hours = 80,000/ 20

= 4,000 hours

Overhead Applied in November = 4,000 x 1.5

= 6,000

• 30 November Balance in Work in Process Inventory

Work In Process = Beginning Work in Process + Manufacturing Cost (Direct Materials + Direct Labor + Manufacturing Overheads) - Completed and Transferred Goods

= 8,000 + (40,000 + 80,000 + 6,000) - 150,000

= - 16,000

Question information :

P4.36 Flow of manufacturing costs; incomplete data Conundrum Lid manufactures furniture. Due to a fire in the administrative offices, the accounting records for 04.6 November of the current year were partially destroyed. You have been able to piece together the following information from the ledger. Raw material inventory Accounts payable 40 000 12 000 Bal. 31/10 Bal. 30/1 1 45000 Work in process inventory Finished goods inventory Bal. 31/10 8000 Bal. 31/10 35000 Manufacturing overhead Cost of goods sold 60 000 Wages payable Sales revenue 1 500 Bal. 30/1 1 Accounts receivable Bal. 31/10 8000 By examining various source documents and interviewing several employees, you are able to gather the following additional information: Collection of accounts receivable during November amounts to $205 000. Sales revenue in November is 120 per cent of cost of goods sold. All sales are on credit. Overhead is applied using an annual predetermined overhead rate based on direct labour hours. The budgeted overhead for the current year is $72 000. Budgeted direct labour cost for the current year is $960 000. The direct labour rate is $20 per hour. The accounts payable balance on 30 November is $1 000. Only purchases of raw material are credited to accounts payable. A payment of $81 000 was made on 15 November. November's cost of goods sold amounts to $180 000. The 30 November balance in finished goods inventory is $5000. Payments of $79 500 were made to direct labour employees during November. The 31 October balance in the wages payable account is $1000. CS The lactoPhony facturing overhead for November is $60 000. An analysis of the furniture still in process on 30 November reveals that so far these items have required 500 hours of direct labour and $20500 of direct material