Garst Manufacturing is working on two jobs.Cost is accumulated under a job order cost system,and overhead is applied on the basis of direct labor hours.The company estimated that overhead would be $64,000 and 10,000 direct labor hours would be worked.Both projects were started and completed in the current accounting period.The following transactions were completed during the period:
(a)Used $10,000 of direct material on Project I and $6,800 of direct material on Project II.
(b)Labor costs for the two jobs amounted to the following: Project I,$24,000 (2,000 hours);Project II,$44,000 (6,000 hours).
(c)Project II was sold during the period for $120,000.
The ending balance in work in process was:

Question

Garst Manufacturing is working on two jobs.Cost is accumulated under a job order cost system,and overhead is applied on the basis of direct labor hours.The company estimated that overhead would be $64,000 and 10,000 direct labor hours would be worked.Both projects were started and completed in the current accounting period.The following transactions were completed during the period: 
(a)Used $10,000 of direct material on Project I and $6,800 of direct material on Project II.
(b)Labor costs for the two jobs amounted to the following: Project I,$24,000 (2,000 hours);Project II,$44,000 (6,000 hours).
(c)Project II was sold during the period for $120,000.
The ending balance in work in process was:

Quizplus · Accepted Answer

The ending balance in work in process can be calculated as follows:
Direct material used in Project I = $10,000
Direct material used in Project II = $6,800
Total direct material used = $16,800
Direct labor cost for Project I = $24,000
Direct labor cost for Project II = $44,000
Total direct labor cost = $68,000
Overhead applied = (10,000 direct labor hours / 10,000 total estimated direct labor hours) x $64,000 = $64,000
Total cost incurred = $16,800 + $68,000 + $64,000 = $148,800
Cost of goods sold for Project II = $120,000
Ending balance in work in process = Total cost incurred - Cost of goods sold for Project II = $28,800 + $18,000 = $46,800. Therefore, the correct answer is C.

Garst Manufacturing Is Working on Two Jobs