Spruce Company uses a job costing system. Spruce Company's schedule of cost of goods manufactured showed the following amounts for the month ended August 31. Allocated manufacturing overhead costs for August amount to $44,000.
What is the amount of work in process inventory (before any adjustment for overallocated or underallocated manufacturing overhead)on August 31?

Question

Spruce Company uses a job costing system. Spruce Company's schedule of cost of goods manufactured showed the following amounts for the month ended August 31.  Allocated manufacturing overhead costs for August amount to $44,000.
What is the amount of work in process inventory (before any adjustment for overallocated or underallocated manufacturing overhead)on August 31?

Quizplus · Accepted Answer

The work in process inventory is the total cost of all partially completed jobs at the end of the month. From the schedule of cost of goods manufactured, we can see that the total manufacturing costs for the month were $177,500 ($104,000 + $28,000 + $45,500). To determine the work in process inventory, we need to subtract the cost of completed goods from this total. Since there is no information given about sales or completed goods, we can assume that all of the $177,500 is in process as of August 31. Therefore, the work in process inventory is $177,500 before any adjustment for overallocated or underallocated manufacturing overhead.

Spruce Company Uses a Job Costing System