Question

Wherry Furnishings uses job order costing. The company has a contract to deliver furniture to a hotel. The hotel has 60 basic hotel rooms that each need two double beds and 15 suites that each need one king size bed. Each basic hotel room has direct material costs of $400 and direct labor costs of $250. Each suite has direct material costs of $350 and direct labor costs of $175. For all rooms, overhead was 50% of direct labor cost. Wherry started the project in January and by the end of the month had completed 34 basic rooms and 8 suites. Neither Work in Process nor Finished Goods had a beginning balance. What was Wherry’s Finished Goods Inventory account balance on January 31?

Answer 1

Answer:

$31,250

Explanation:

basic rooms = 60

cost per basic room:

direct materials $400

direct labor $250

overhead $125

cost per basic room = $775

suites = 15

cost per suite:

direct materials $350

direct labor $175

overhead $87.50

cost per suite = $612.50

finished goods inventory account balance at the end of January = ($775 x 34 basic rooms) + ($612.50 x 8 suites) = $26,350 + $4,900 = $31,250