Question

Farber Corporation uses a job-order costing system. The information below is from the financial records of the company for last year: Total manufacturing costs $2,500,000 Cost of goods manufactured $2,425,000 Predetermined overhead rate 80% of direct labor costApplied overhead was 30% of total manufacturing costs. The Work in Process inventory at January 1 was 75% of the Work in Process inventory at December 31. The Work in Process inventory at December 31 was: a) $100,000 b) $225,000 c) $75,000 d) $300,000.

Answer 1

Answer:

d) $300,000.

Explanation:

Paticulars Amount

Manufacturing costs + Beginning WIP = Ending WIP + Cost of Goods manufactured  

Let ending WIP be x  

Beginning WIP be 0.75x  

2,500,000 + 0.75x = x + 2,425,000  

2,500,000 - 2,425,000 = x - 0.75x  

75,000 = 0.25x  

x = 300,000

Therefore, The Work in Process inventory at December 31 was $300,000.