The following account balances at the beginning of January were selected from the general ledger of Fresh Bagel Manufacturing Company: Additional data:
1) Actual manufacturing overhead for January amounted to $66,100.
2) Total direct labor cost for January was $64,000.
3) The predetermined manufacturing overhead rate is based on direct labor cost. The budget for the year called for $248,000 of direct labor cost and $322,400 of manufacturing overhead costs.
4) The only job unfinished on January 31 was Job No. 151, for which total direct labor charges were $5600 (1600 direct labor hours)and total direct material charges were $14,400.
5) Cost of direct materials placed in production during January totaled $124,000. There were no indirect material requisitions during January.
6) January 31 balance in raw materials inventory was $35,400.
7) Finished goods inventory balance on January 31 was $35,200.
What is the work in process inventory balance on January 31?

Question

The following account balances at the beginning of January were selected from the general ledger of Fresh Bagel Manufacturing Company:  Additional data:
1) Actual manufacturing overhead for January amounted to $66,100.
2) Total direct labor cost for January was $64,000.
3) The predetermined manufacturing overhead rate is based on direct labor cost. The budget for the year called for $248,000 of direct labor cost and $322,400 of manufacturing overhead costs.
4) The only job unfinished on January 31 was Job No. 151, for which total direct labor charges were $5600 (1600 direct labor hours)and total direct material charges were $14,400.
5) Cost of direct materials placed in production during January totaled $124,000. There were no indirect material requisitions during January.
6) January 31 balance in raw materials inventory was $35,400.
7) Finished goods inventory balance on January 31 was $35,200.
What is the work in process inventory balance on January 31?

Quizplus · Accepted Answer

To calculate the work in process (WIP) inventory balance, we need to use the formula:
WIP inventory = Total manufacturing costs – Cost of goods manufactured
To find total manufacturing costs, we need to add up the direct materials, direct labor, and manufacturing overhead costs:
Direct materials: $124,000
Direct labor: $64,000
Manufacturing overhead: $66,100
Total manufacturing costs: $254,100
To find the cost of goods manufactured (COGM), we need to add up the total manufacturing costs and subtract the beginning balance of WIP inventory and add the ending balance of WIP inventory. Since we do not have the beginning balance of WIP inventory, we will assume it to be zero. The ending balance of WIP inventory is the total cost of Job No. 151, which includes direct labor charges of $5600 and direct material charges of $14,400.
COGM = Total manufacturing costs + Beginning WIP inventory – Ending WIP inventory
COGM = $254,100 + $0 - $20,000 ($5600 + $14,400)
COGM = $234,100
Now, we can use the formula to calculate the ending balance of WIP inventory:
WIP inventory = Total manufacturing costs – Cost of goods manufactured
WIP inventory = $254,100 - $234,100
WIP inventory = $20,000
Therefore, the work in process inventory balance on January 31 is $20,000, which is option C.

The Following Account Balances at the Beginning of January Were