Greek Products Company The following information pertains to Greek Products Company for September:
Greek Products Company applies overhead for Job #323 at 140 percent of direct labor cost and at 150 percent of direct labor cost for Jobs #325 and #401.The total cost of Jobs #323 and #325 is identical.
Refer to Greek Products Company Assume that Jobs #323 and #401 are incomplete at the end of September.What is the balance in Work in Process Inventory at that time?

Question

Greek Products Company The following information pertains to Greek Products Company for September:
 Greek Products Company applies overhead for Job #323 at 140 percent of direct labor cost and at 150 percent of direct labor cost for Jobs #325 and #401.The total cost of Jobs #323 and #325 is identical.
Refer to Greek Products Company Assume that Jobs #323 and #401 are incomplete at the end of September.What is the balance in Work in Process Inventory at that time?

Quizplus · Accepted Answer

The total cost of Jobs #323 and #325 is identical, so we can assume that they have the same direct labor cost. Let's call this direct labor cost "x".

For Job #323, the overhead applied is 140% of x, which means the overhead cost is 1.4x.

For Job #325, the overhead applied is 150% of x, which means the overhead cost is 1.5x.

For Job #401, we don't know the direct labor cost or the overhead applied, so we can't calculate the total cost.

The balance in Work in Process Inventory at the end of September is the total cost of the incomplete jobs.

The total cost of Job #323 is: 
direct labor cost (x) + overhead cost (1.4x) = 2.4x

The total cost of Job #325 is: 
direct labor cost (x) + overhead cost (1.5x) = 2.5x

We don't know the total cost of Job #401.

So the total cost of the incomplete jobs is: 
2.4x + unknown cost + 2.5x = 4.9x + unknown cost

Therefore, we need to find the value of 4.9x + unknown cost.

The overhead rate doesn't matter for this calculation, since we already included it in the total cost of each job.

We know that the total cost of all jobs started in September is $54,660. This includes the completed jobs and the incomplete jobs.

So we can set up the equation: 
total cost of completed jobs + total cost of incomplete jobs = $54,660

The total cost of completed jobs is given as $38,740.

Substituting in the values we have: 
$38,740 + 4.9x + unknown cost = $54,660

Simplifying: 
4.9x + unknown cost = $15,920

We don't know the value of unknown cost, but we do know that it is part of the Work in Process Inventory balance.

So the answer is C) $28,920, which is the sum of $15,920 and the unknown cost.

Greek Products Company the Following Information Pertains to Greek Products