Question

The following are Acme's production costs for the quarter ended September 30th: Direct materials $ 290,000 Direct labor $ 240,000 Factory overhead $ 39,000 What amount of costs should be traced to specific products in the process?
A) $240,000
B) $464,000
C) $274,000
D) $430,000

Answer 1

Answer:

$530000

Explanation:

Note: wrong options are given as the answer $530000.

Given: Direct material= $290000.

           Direct Labor= $240000.

           Factory overhead= $39000.

Now, finding the cost of specific products in the process.

As we have to find the cost of a specific product in the process and we know direct costs can be traced easily to a cost object, but indirect costs cannot be easily traced to a cost object, therefore, we include only those cost that is directly impacting cost of product.

Remember, Factory overhead is an indirect cost.

Costs to specific products in the process= $Direct\ labor+ direct\ material$

⇒ Costs to specific products in the process= $240000+290000$

∴  Costs to specific products in the process= $\ 530000$

Hence, $530000 is the amount of cost that should be traced to specific products in the process.