Kelly Sportswear manufactures a specialty line of T-shirts.The company uses a job-order costing system.During March,the following costs were incurred on Job 1052:
$$\begin{array} { | l | r | }
\hline \text { Direct materials: } & \$ 13,700 \
\hline \text { Direct labour: } & \$ 4,800 \
\hline
\end{array}$$
Manufacturing overhead was applied at the rate of $25 per machine hour,and Job 1052 required 800 machine hours.In addition,selling and shipping costs of $7,000 were incurred.Job 1052 consisted of 7,000 shirts and was completed on March 24.The total cost of job 1052 transferred from Work in Process to Finished Goods on March 24 is:

Question

Kelly Sportswear manufactures a specialty line of T-shirts.The company uses a job-order costing system.During March,the following costs were incurred on Job 1052:
$$\begin{array} { | l | r | } 
\hline \text { Direct materials: } & \$ 13,700 \
\hline \text { Direct labour: } & \$ 4,800 \
\hline
\end{array}$$
Manufacturing overhead was applied at the rate of $25 per machine hour,and Job 1052 required 800 machine hours.In addition,selling and shipping costs of $7,000 were incurred.Job 1052 consisted of 7,000 shirts and was completed on March 24.The total cost of job 1052 transferred from Work in Process to Finished Goods on March 24 is:

Quizplus · Accepted Answer

The total cost of Job 1052 includes direct materials cost, direct labor cost, applied manufacturing overhead cost, and selling and shipping costs. 
Direct Materials Cost = $56,000 
Direct Labor Cost = $16,800 
Applied Manufacturing Overhead Cost= $20,000 ($25 per machine hour * 800 machine hours) 
Selling and Shipping Costs= $7,000 
Total Cost of Job 1052= Direct Materials Cost+ Direct Labor Cost + Applied Manufacturing Overhead Cost + Selling and Shipping Costs= $56,000 + $16,800 + $20,000 + $7,000 = $99,800 
Therefore, the best choice is B, $38,500, which is the total cost of Job 1052 transferred from Work in Process to Finished Goods on March 24.