Bard Manufacturing uses a job order cost accounting system. During one month Bard purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Bard incurred a factory payroll of $150,000, paid in cash, of which $40,000 is classified as indirect labor. Bard uses a predetermined overhead application rate of 150% of direct labor cost. Bard's beginning and ending Goods in Process Inventory are $15,500 and $27,000 respectively. Compute the cost of product transferred to Finished Goods Inventory:

Question

Quizplus · Accepted Answer

The cost of direct materials used in production = $195,000 - $30,000 = $165,000
Total manufacturing costs incurred = $165,000 + $110,000 (direct labor) + $60,000 (150% x $40,000 indirect labor) = $335,000
Cost of goods manufactured = $335,000 + $15,500 (beginning WIP) - $27,000 (ending WIP) = $323,500
Therefore, the cost of product transferred to Finished Goods Inventory = $323,500.

Bard Manufacturing Uses a Job Order Cost Accounting System