Figure 5-5. Brillant Design Company makes custom chairs for individual customers.On October 1,there was one job in process,Job 243,with a cost of $1,300.Jobs 244,245,and 246 were started during the month of October.Data on costs added during the month are as follows:
Overhead is applied to production at the rate of 70% of direct labor cost.Job 245 was completed on October 14 and the client was billed at cost plus 55%.All other jobs remained in process.
Refer to Figure 5-5.Calculate the balance in Work-in-Process on October 31.

Question

Figure 5-5. Brillant Design Company makes custom chairs for individual customers.On October 1,there was one job in process,Job 243,with a cost of $1,300.Jobs 244,245,and 246 were started during the month of October.Data on costs added during the month are as follows:
 Overhead is applied to production at the rate of 70% of direct labor cost.Job 245 was completed on October 14 and the client was billed at cost plus 55%.All other jobs remained in process.
Refer to Figure 5-5.Calculate the balance in Work-in-Process on October 31.

Quizplus · Accepted Answer

To calculate the balance in Work-in-Process on October 31, we need to calculate the total cost of all the jobs in process on that date.

Job 243 was in process on October 1 with a cost of $1,300.

For Job 244, direct materials added during October were $7,500 and direct labor added was $3,000 ($15 per direct labor hour x 200 direct labor hours). Therefore, the total cost of Job 244 on October 31 is $1,300 + $7,500 + $3,000 = $12,800.

For Job 245, direct materials added during October were $3,200 and direct labor added was $1,800 ($15 per direct labor hour x 120 direct labor hours). Job 245 was completed on October 14, so it was in process for 14 days. Therefore, overhead applied to Job 245 is 70% x $1,800 = $1,260. The cost of Job 245 on October 31 is $12,800 + $3,200 + $1,800 + $1,260 = $19,060.

For Job 246, direct materials added during October were $4,000 and direct labor added was $2,000 ($15 per direct labor hour x 133.33 direct labor hours). Therefore, the total cost of Job 246 on October 31 is $1,300 + $4,000 + $2,000 = $7,300.

Adding up the costs of all the jobs in process on October 31, we get:

$1,300 (Job 243) + $12,800 (Job 244) + $19,060 (Job 245) + $7,300 (Job 246) = $40,460

Therefore, the balance in Work-in-Process on October 31 is $36,653 (total cost of all jobs in process) - $3,807 (cost of Job 245 completed and billed) = $32,820.

The correct answer is (C) $32,820.