Question

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

Answer 1

Answer:

Explanation:

Direct Material   $165,000 (195,000 - 30,000)

Direct labor        $110,000 (150,000 - 40,000)

Overhead           $165,000 ( 110,000 * 150%)

Total cost           $440,000

Work in progress transfer = $15,500 + $440,000 - $27,000 = $428,500