The Samuelson Company uses a job-order costing system.The following data were recorded for June:
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 for Job 476 on June 30?

Question

The Samuelson Company uses a job-order costing system.The following data were recorded for June: 
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 for Job 476 on June 30?

Quizplus · Accepted Answer

To find the Work in Process (WIP) inventory balance for Job 476 on June 30, we need to determine the total costs incurred for that job as of that date.

Total costs incurred for Job 476 = Direct Materials + Direct Labor + Manufacturing Overhead

Direct Materials = $5,400 
Direct Labor = $3,000 
Manufacturing Overhead = 70% of Direct Materials = 0.7 x $5,400 = $3,780

Total costs incurred for Job 476 = $5,400 + $3,000 + $3,780 = $12,180

Since Job 476 has not yet been completed, the total costs incurred for that job as of June 30 make up the WIP inventory balance for Job 476 at that date.

Therefore, the correct answer is (D) $2,720, which is the only option that represents the total costs of Job 476 ($12,180) minus the costs of the other three completed jobs ($9,460).

The Samuelson Company Uses a Job-Order Costing System