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 rate of 150% of direct labor cost.
- The total manufacturing costs added during the period are:
A) $470,000.
B) $540,000.
C) $440,000.
D) $570,000.
E) $500,000.

Question

Quizplus · Accepted Answer

The total direct labor cost is $110,000 ($150,000 - $40,000 indirect labor). Therefore, the predetermined overhead rate is $1.50 x $110,000 = $165,000.
The total manufacturing costs added during the period are as follows:
Direct materials issued = $165,000 - $30,000 indirect materials = $135,000
Direct labor = $110,000
Manufacturing overhead = $1.50 x $110,000 = $165,000
Total manufacturing costs added = $135,000 + $110,000 + $165,000 = $410,000.
Therefore, the answer is C) $440,000.

Minstrel Manufacturing Uses a Job Order Costing System