The Lee Company uses a job-order costing system. The following data were recorded for June: Overhead is charged to production at 80% of direct materials cost. Jobs 235, 237, and 238 were completed during June and transferred to finished goods. Jobs 235 and 238 have been delivered to customers.
-Lee Company's cost of goods sold for June was:

Question

The Lee Company uses a job-order costing system. The following data were recorded for June:  Overhead is charged to production at 80% of direct materials cost. Jobs 235, 237, and 238 were completed during June and transferred to finished goods. Jobs 235 and 238 have been delivered to customers.
-Lee Company's cost of goods sold for June was:

Quizplus · Accepted Answer

To calculate the cost of goods sold, we need to calculate the total manufacturing cost for the jobs completed and transferred to finished goods during June.

Total manufacturing cost for Job 235 = Direct materials cost + Direct labor cost + Manufacturing overhead cost 
= $2,000 + $1,200 + ($2,000 x 80%) 
= $5,600

Total manufacturing cost for Job 237 = Direct materials cost + Direct labor cost + Manufacturing overhead cost 
= $1,500 + $900 + ($1,500 x 80%) 
= $3,420

Total manufacturing cost for Job 238 = Direct materials cost + Direct labor cost + Manufacturing overhead cost 
= $1,800 + $1,080 + ($1,800 x 80%) 
= $4,104

Total manufacturing cost for all three jobs = $5,600 + $3,420 + $4,104 = $13,124

Therefore, the cost of goods sold for June would be equal to the total manufacturing cost for all jobs completed and transferred to finished goods during the month.

Cost of goods sold = Total manufacturing cost for all jobs completed and transferred to finished goods 
= $13,124

Hence, the best choice is C ($9,730).

The Lee Company Uses a Job-Order Costing System