Question

Redwoods Company designs and builds exotic furniture for individual customers. On March 1, there were two jobs in process: Job 400 with a beginning balance of $23,000 and Job 402 with a beginning balance of $6,000. Overhead costs are applied by using a rate of 50% of direct labor costs. Both jobs are unfinished on March 31. Data on March costs for both the jobs are as follows:
Job 400 Job 402
Direct materials $6,000 $ 10,000
Direct labor cost 4,000 13,000
1. What is the total of the work-in-process account on March 31?
a. $45,000
b. $58,490
c. $70,500
d. $38,00
e. None of these

Answer 1

Answer:

c. $70,500

Explanation:

The computation of the total work in process account is shown below:

For Job 400

= Beginning balance + direct material + direct labor cost + overhead cost

= $23,000 + $6,000 + $4,000 + $2,000

= $35,000

The overhead = $4,000 × 50% = $2,000

For Job 402

= Beginning balance + direct material + direct labor cost + overhead cost

= $6,000 + $10,000 + $13,000 + $6,500

= $35,500

The overhead = $13,000 × 50% = $6,500

Now the total work in progress would be

= $35,000 + $35,500

= $70,500