Archetype Fabrication makes pre-stressed concrete forms for the building industry. They use just-in-time production and accounting methodology. At the beginning of January, selected account balances are shown in the T-accounts below. During January, the following 5 transactions take place:
1) Purchase $40,000 of materials on account.
2) Pay out $25,000 of direct labor costs.
3) Incur $9,000 of manufacturing overhead costs.
4) Complete 12 units. Each unit includes $1,500 of materials, $300 of direct labor, and $150 of manufacturing overhead costs.
5) Sell 10 of the 12 completed units at a price of $2,200.
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Use the T-accounts shown above to record the transactions, and then answer the following question:
After transaction number 3, what was the balance in the Raw and in-process inventory account?
A) $40,000
B) $76,000
C) $67,000
D) $42,000

Question

Archetype Fabrication makes pre-stressed concrete forms for the building industry. They use just-in-time production and accounting methodology. At the beginning of January, selected account balances are shown in the T-accounts below.  During January, the following 5 transactions take place:
1) Purchase $40,000 of materials on account.
2) Pay out $25,000 of direct labor costs.
3) Incur $9,000 of manufacturing overhead costs.
4) Complete 12 units. Each unit includes $1,500 of materials, $300 of direct labor, and $150 of manufacturing overhead costs.
5) Sell 10 of the 12 completed units at a price of $2,200.
-
Use the T-accounts shown above to record the transactions, and then answer the following question:
After transaction number 3, what was the balance in the Raw and in-process inventory account?
A) $40,000 
B) $76,000 
C) $67,000 
D) $42,000

Quizplus · Accepted Answer

D) Calculations: $2,000 + $40,000 = $42,000

Archetype Fabrication Makes Pre-Stressed Concrete Forms for the Building Industry