Tonneau Corporation had the following information available for October 2018: $\begin{array}{lr}
\text { Work in Process, October } 1 & \$ 20,000 \
\text { Materials placed into production, October } & 27,500 \
\text { Direct labor, October } & 37,500
\end{array}$
Factory overhead rate is 150 percent of direct labor costs.
Job cost sheets had the following balances:
$$\begin{array} { l r }
\mathrm { J } 0 \mathrm { Z } Z 1 & \$ 32,500 \
\mathrm { Job } Z 2 & 55,000 \
\text { Job Z3 } & 35,000 \
\text { Job Z4 } & 18,750
\end{array}$$
Jobs Z3 and Z4 were not completed at the end of December.
What is the balance in Work-in-Process for Tonneau at the end of October?
A)$85,000
B)$87,500
C)$56,250
D)$53,750

Question

Tonneau Corporation had the following information available for October 2018: $\begin{array}{lr}
\text { Work in Process, October } 1 & \$ 20,000 \
\text { Materials placed into production, October } & 27,500 \
\text { Direct labor, October } & 37,500
\end{array}$
Factory overhead rate is 150 percent of direct labor costs.
Job cost sheets had the following balances:
$$\begin{array} { l r } 
\mathrm { J } 0 \mathrm { Z } Z 1 & \$ 32,500 \
\mathrm { Job } Z 2 & 55,000 \
\text { Job Z3 } & 35,000 \
\text { Job Z4 } & 18,750
\end{array}$$
Jobs Z3 and Z4 were not completed at the end of December.
What is the balance in Work-in-Process for Tonneau at the end of October?
A)$85,000
B)$87,500
C)$56,250
D)$53,750

Quizplus · Accepted Answer

The balance in Work-in-Process at the end of October includes the costs of the jobs not completed (Jobs Z3 and Z4) and the costs added during October. The costs added during October are the sum of materials placed into production, direct labor, and factory overhead. Factory overhead is 150% of direct labor costs, so it's 1.5 * $37,500 = $56,250. Adding these together: $27,500 (materials) + $37,500 (direct labor) + $56,250 (factory overhead) = $121,250 total costs added in October. Since Jobs Z3 and Z4 were not completed, their costs ($35,000 + $18,750 = $53,750) represent the Work-in-Process at the end of October.

Tonneau Corporation Had the Following Information Available for October 2018