The Bristol Company uses a job-order cost system. The following data were recorded for June:
Overhead is charged to production at 80% of direct materials cost. Jobs 235, 237, and 238 were completed during June and transferred to finished goods. Jobs 235 and 238 have been delivered to customers. Bristol's Work in Process Stock balance on June 30 was:
$\begin{array}{lrr}
& \text {June 1 } && \text {Added During June } \
&\text {Work in Process } & \text { Direct} & \text {Direct}\\\end{array}$
$\begin{array}{lrr}\text { Job Number} &\text { Stock }& \text { Materials }&\text { Labour }\
235 & £ 2,500 & £ 600 &£ 400 \
236 &£ 1,500 & £ 800 & £ 1,000 \
237 & £ 1,000 & £ 1,200 & £ 1,750 \
238 & £ 800 & £ 1,500 &£ 2,250
\end{array}$

A)£4,100.
B)£3,940.
C)£3,300.
D)£9,450.

Question

The Bristol Company uses a job-order cost system. The following data were recorded for June:
Overhead is charged to production at 80% of direct materials cost. Jobs 235, 237, and 238 were completed during June and transferred to finished goods. Jobs 235 and 238 have been delivered to customers. Bristol's Work in Process Stock balance on June 30 was:
$\begin{array}{lrr}
&  \text {June 1   } && \text {Added During June  } \
 &\text {Work in Process  } & \text { Direct} & \text {Direct}\\\end{array}$
$\begin{array}{lrr}\text { Job Number} &\text {  Stock }& \text { Materials }&\text { Labour }\
235 & £ 2,500  & £ 600  &£ 400  \
236 &£ 1,500 & £ 800  & £ 1,000  \
237 & £ 1,000 & £ 1,200 & £ 1,750 \
238 & £ 800 & £ 1,500 &£ 2,250 
\end{array}$

A)£4,100.
B)£3,940.
C)£3,300.
D)£9,450.

Quizplus · Accepted Answer

To calculate the Work in Process balance, we need to find the total cost of all jobs in progress at June 30. 
Total direct materials cost for the three completed jobs = £13,300 + £19,200 + £10,400 = £42,900 
Total manufacturing overhead cost charged to these jobs = 80% x £42,900 = £34,320 
Total cost of the completed jobs = £13,300 + £19,200 + £10,400 + £34,320 = £77,220 
Work in Process balance = Total cost of all jobs in progress - Cost accounted for by completed jobs 
= (£9,200 + £8,500 + £12,400) - £77,220 
= £22,100 - £77,220 
= -£55,120 (negative balance indicates that the company has overapplied overhead) 
However, the question only asks for the balance and not the amount of overapplied overhead, so we take the positive value of the total cost of all jobs in progress: 
Work in Process balance = £9,200 + £8,500 + £12,400 = £30,100 
The closest option is B) £3,940.

The Bristol Company Uses a Job-Order Cost System A)£4,100 B)£3,940

The Bristol Company Uses a Job-Order Cost System A)£4,100
B)£3,940