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.

Multiple Choice

$558,500.

$440,000.

$413,000.

$428,500.

$415,000.

Answer 1

Answer: $428,500

Calculations:

Direct materials [$195,000 - $30,000 indirect]	$165,000
Direct labor [$150,000 - $40,000 indirect]	$110,000
Overhead applied [$110,000 x 150%]	$165,000
Total cost of goods manufactured	$440,000
Add: Beginning work in process inventory	$15,500
(Less): Ending work in process inventory	($27,000)
Cost of jobs transferred to finished goods inventory	$428,500

Thus, Option-iv $428,500 is correct and remaining options are incorrect.