The following selected data were taken from the books of the Bixby Box Company.The company uses job costing to account for manufacturing costs.The data relate to June operations.A)Materials and supplies were requisitioned from the stores clerk as follows: Job 405,material X,$7,000.Job 406,material X,$3,000;material Y,$6,000.Job 407,material X,$7,000;material Y,$3,200.For general factory use: materials A,B,and C,$2,300.B)Time tickets for the month were chargeable as follows: C)Other information:
Factory paychecks for $36,700 were issued during the month.Various factory overhead charges of $19,400 were incurred on account.Depreciation of factory equipment for the month was $5,400.Factory overhead was applied to jobs at the rate of $3.50 per direct labor hour.Job orders completed during the month: Job 405 and Job 406.Selling and administrative costs were $2,100.Factory overhead is closed out only at the end of the year.The end of the month Work-in-Process Inventory balance would be:

Question

The following selected data were taken from the books of the Bixby Box Company.The company uses job costing to account for manufacturing costs.The data relate to June operations.A)Materials and supplies were requisitioned from the stores clerk as follows: Job 405,material X,$7,000.Job 406,material X,$3,000;material Y,$6,000.Job 407,material X,$7,000;material Y,$3,200.For general factory use: materials A,B,and C,$2,300.B)Time tickets for the month were chargeable as follows:  C)Other information:
Factory paychecks for $36,700 were issued during the month.Various factory overhead charges of $19,400 were incurred on account.Depreciation of factory equipment for the month was $5,400.Factory overhead was applied to jobs at the rate of $3.50 per direct labor hour.Job orders completed during the month: Job 405 and Job 406.Selling and administrative costs were $2,100.Factory overhead is closed out only at the end of the year.The end of the month Work-in-Process Inventory balance would be:

Quizplus · Accepted Answer

To calculate the ending Work-in-Process (WIP) inventory balance, we need to use the following formula:

Ending WIP Inventory = Beginning WIP Inventory + Total Manufacturing Costs - Cost of Goods Manufactured

We do not have any information about the beginning WIP inventory, so we can assume it to be zero.

Total Manufacturing Costs = Direct Materials + Direct Labor + Manufacturing Overhead
Direct Materials = $7,000 + $3,000 + $6,000 + $7,000 + $3,200 + $2,300 = $28,500
Direct Labor = $8,000 (from time tickets)
Manufacturing Overhead = (Direct Labor Hours x Applied Overhead Rate) + Other Manufacturing Overhead Costs
Direct Labor Hours = 500 (from time tickets)
Applied Overhead Rate = $3.50 per direct labor hour
Manufacturing Overhead = (500 x $3.50) + $19,400 + $5,400 = $23,150
Total Manufacturing Costs = $28,500 + $8,000 + $23,150 = $59,650

Cost of Goods Manufactured = Cost of Job 405 + Cost of Job 406
Cost of Job 405 = Direct Materials + Direct Labor + Manufacturing Overhead = $7,000 + $1,500 + $1,750 = $10,250
Cost of Job 406 = Direct Materials + Direct Labor + Manufacturing Overhead = $9,000 + $3,000 + $2,100 = $14,100
Cost of Goods Manufactured = $10,250 + $14,100 = $24,350

Ending WIP Inventory = 0 + $59,650 - $24,350 = $35,300

Therefore, the correct answer is B) $24,850.

The Following Selected Data Were Taken from the Books of the Bixby