The following information is available for completed Job No. 402: Direct materials, $80,000; direct labor, $120,000; manufacturing overhead applied, $60,000; units produced, 5,000 units; units sold, 4,000 units. The cost of the finished goods on hand from this job is
A) $40,000.
B) $260,000.
C) $52,000.
D) $208,000.

Question

Quizplus · Accepted Answer

To calculate the cost of finished goods on hand (i.e. unsold units), we need to find the total cost of the completed job and then subtract the cost of goods sold (COGS). The total cost of the completed job is:

Direct materials + direct labor + manufacturing overhead applied
= $80,000 + $120,000 + $60,000
= $260,000

The COGS is calculated as the cost of goods manufactured (COGM) multiplied by the fraction of units sold. The COGM is calculated as the total cost of the completed job divided by the number of units produced:

COGM = Total cost of completed job / Units produced
= $260,000 / 5,000 units
= $52 per unit

The COGS is then:

COGS = COGM x Units sold
= $52 x 4,000 units
= $208,000

Therefore, the cost of finished goods on hand is:

Total cost of completed job - COGS
= $260,000 - $208,000
= $52,000

So, the correct answer is C) $52,000.

The Following Information Is Available for Completed Job No