The Donaldson Company uses a job-order costing system. The following data were recorded for July: Overhead is applied to jobs at the rate of 80% of direct materials cost. Jobs 475, 477, and 478 were completed during July and transferred to finished goods. Jobs 475 and 478 have been delivered to the customer. Donaldson's Work in Process inventory balance on July 31 was:

Question

The Donaldson Company uses a job-order costing system. The following data were recorded for July:  Overhead is applied to jobs at the rate of 80% of direct materials cost. Jobs 475, 477, and 478 were completed during July and transferred to finished goods. Jobs 475 and 478 have been delivered to the customer. Donaldson's Work in Process inventory balance on July 31 was:

Quizplus · Accepted Answer

To determine the ending balance in Work in Process inventory, we need to calculate the total cost of the jobs that were still in process as of July 31.

We know that Jobs 475, 477, and 478 were completed and transferred out of WIP during the month, so we only need to consider the cost of Job 476.

Direct materials cost for Job 476 was $1,100. Applying overhead at 80% of this cost gives us an overhead cost of $880. Therefore, the total cost of Job 476 was $1,100 + $880 = $1,980.

Since Job 476 was still in process at the end of July, its total cost is included in the ending balance of Work in Process inventory. So the ending balance is $1,980.

Therefore, the best choice is C.

The Donaldson Company Uses a Job-Order Costing System