Question

Juanita corporation uses a job-order cost system and applies overhead on the basis of direct labor cost. At the end of October, Juanita had one job still in process. The job cost sheet for this job contained the following information:
Direct materials...............................$480
Direct Labor....................................$150
Manufacturing overhead applied....$600
An additional $100 of labor was needed in November to complete this job. For this job, how much should Juanita have transferred to finished goods inventory in November when it was completed?

Answer 1

Answer:

$1,730

Explanation:

Currently, the job order contains the following costs:

• Direct materials $480
• Direct labor $150
• Manufacturing overhead $600 (or $4 per $1 of direct labor)

Since the manufacturing process still requires $100 more of direct labor, it should also require $400 more of overhead costs. So the total cost of the job order will be:

($480 + $150 + $600) + ($100 + $400) = $1,730