The Samuelson Company uses a job-order costing system.The following data were recorded for June:
$\begin{array}{l}
\begin{array}{cc}
&\text { Work in Process }\
\text { Job Number } & \text { Inventory. June 1 } \
475 & \$ 1,000 \
476 & \$ 900 \
477 & \$ 800 \
478 & \$ 600
\end{array}

\begin{array}{cc}
\text { Added During June }\
\text { Direct }&\text { Direct }\
{\text { Materials }} & \text { Labour } \
\$ 400 & \$ 200 \
\$ 600 & \$ 800 \
\$ 900 & \$ 1,400 \
\$ 1,000 & \$ 1,900
\end{array}
\end{array}$
Overhead is charged to production at 70% of the direct materials cost.Jobs 475,477,and 478 have been delivered to the customer.What was Samuelson's Work in Process inventory balance on June 30?

Question

The Samuelson Company uses a job-order costing system.The following data were recorded for June: 
$\begin{array}{l}
\begin{array}{cc}
&\text { Work in Process }\
\text { Job Number } & \text { Inventory. June 1 } \
475 & \$ 1,000 \
476 & \$ 900 \
477 & \$ 800 \
478 & \$ 600
\end{array}

\begin{array}{cc}
\text { Added During June }\
\text { Direct }&\text { Direct }\
{\text { Materials }} & \text { Labour } \
\$  400 & \$ 200 \
\$  600 & \$ 800 \
\$  900 & \$ 1,400 \
\$ 1,000 & \$ 1,900
\end{array}
\end{array}$
Overhead is charged to production at 70% of the direct materials cost.Jobs 475,477,and 478 have been delivered to the customer.What was Samuelson's Work in Process inventory balance on June 30?

Quizplus · Accepted Answer

First, we need to calculate the total direct materials and direct labor for each job:

Job 475: Direct Materials = $400, Direct Labor = $200
Job 476: Direct Materials = $600, Direct Labor = $800
Job 477: Direct Materials = $900, Direct Labor = $1,400
Job 478: Direct Materials = $1,000, Direct Labor = $1,900

Next, we can calculate the total overhead charged to production by multiplying the total direct materials cost by 70%:

Total direct materials cost = $400 + $600 + $900 + $1,000 = $2,900
Total overhead charged = $2,900 x 70% = $2,030

To calculate the ending work in process (WIP) inventory balance, we need to sum up the total direct materials, direct labor, and overhead for the jobs that were still in process at the end of June (Job 476):

Direct Materials = $600
Direct Labor = $800
Overhead = $600 x 70% = $420

Total WIP inventory balance = $600 + $800 + $420 = $1,820

Therefore, the correct answer is D) $2,720.

The Samuelson Company Uses a Job-Order Costing System Overhead Is Charged to Production at 70% of the Direct