Question

Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $225,600 of raw materials on credit; issued materials to production of $218,000 of which $36,900 were indirect. Minstrel incurred a factory payroll of $163,800, of which $46,900 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 $17,800 and $31,600 respectively. Compute the cost of product transferred to Finished Goods Inventory:

Answer 1

Answer:

The cost of product transferred to Finished Goods Inventory is $459,550

Explanation:

The computation of the cost of product transferred to Finished Goods Inventory is shown below:

= Beginning Work in Process Inventory + issued of raw materials - indirect material + factory payroll - indirect labor + overhead cost - ending Work in Process Inventory

= $17,800 +  $218,000 -  $36,900 + $163,800 -  $46,900  + $175,350 - $31,600

= $459,550

The overhead cost is computed below:

= (Factory payroll - indirect labor) × percentage of direct labor

= ($163,800 -  $46,900) × 150%

= $175,350