Minstrel Manufacturing uses a job order costing system.During one month,Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect.Minstrel incurred a factory payroll of $150,000,of which $40,000 was indirect labor.Minstrel uses a predetermined overhead application rate of 150% of direct labor cost.
-Minstrel's beginning and ending Work in Process Inventory are $15,500 and $27,000 respectively.Compute the cost of jobs transferred to Finished Goods Inventory.
A)$558,500.
B)$440,000.
C)$413,000.
D)$428,500.
E)$415,000.

Question

Quizplus · Accepted Answer

Raw materials used for production = Purchases - Ending raw materials inventory
Raw materials used for production = $198,000 - $0 = $198,000

Direct materials used in production = Raw materials used - Indirect materials used
Direct materials used in production = $198,000 - $30,000 = $168,000

Direct labor = Factory payroll - Indirect labor
Direct labor = $150,000 - $40,000 = $110,000

Manufacturing overhead applied = 150% x Direct labor cost
Manufacturing overhead applied = 150% x $110,000 = $165,000

Total manufacturing costs = Direct materials + Direct labor + Manufacturing overhead applied
Total manufacturing costs = $168,000 + $110,000 + $165,000 = $443,000

Cost of goods manufactured = Total manufacturing costs + Beginning work in process inventory - Ending work in process inventory
Cost of goods manufactured = $443,000 + $15,500 - $27,000 = $431,500

Cost of jobs transferred to finished goods inventory = Cost of goods manufactured
Cost of jobs transferred to finished goods inventory = $431,500

Therefore, the answer is D) $428,500.

Minstrel Manufacturing Uses a Job Order Costing System