Minstrel Manufacturing uses a job order costing system.During one month Minstrel purchased $198,000 of raw materials on credit;issued materials to production of $195,000 of which $30,000 were indirect.Minstrel incurred a factory payroll of $150,000,paid in cash,of which $40,000 was indirect labor.Minstrel uses a predetermined overhead application rate of 150% of direct labor cost.Minstrel's beginning and ending Work in Process Inventory are $15,500 and $27,000 respectively.Compute the cost of product transferred to Finished Goods Inventory:

Question

Quizplus · Accepted Answer

First, we need to calculate the total manufacturing costs incurred during the month:

Direct materials used in production = $195,000 - $30,000 (indirect materials) = $165,000
Direct labor = $150,000 - $40,000 (indirect labor) = $110,000
Manufacturing overhead = 150% x $110,000 = $165,000

Total manufacturing costs = $165,000 + $165,000 + $165,000 = $495,000

Next, we need to calculate the total cost of Work in Process Inventory:

Beginning WIP Inventory = $15,500
Total manufacturing costs = $495,000
Ending WIP Inventory = $27,000

Total cost of WIP Inventory = Beginning WIP Inventory + Total manufacturing costs - Ending WIP Inventory = $15,500 + $495,000 - $27,000 = $483,500

Finally, we can calculate the cost of product transferred to Finished Goods Inventory:

Cost of product transferred to Finished Goods Inventory = Total manufacturing costs - Cost of WIP Inventory = $495,000 - $483,500 = $11,500

Therefore, the total cost of product transferred to Finished Goods Inventory is $495,000 - $11,500 = $483,500.

However, the question asks for the cost of product transferred to Finished Goods Inventory, not the total cost. The cost of product transferred to Finished Goods Inventory only includes direct materials, direct labor, and manufacturing overhead applied to that specific product. Since we don't have enough information to calculate the direct materials and direct labor costs for the product, we can assume that the cost of product transferred to Finished Goods Inventory is equal to the total manufacturing costs, which is $495,000.

Therefore, the best answer is D) $428,500.

Minstrel Manufacturing Uses a Job Order Costing System