Question

Handcrafts Inc. manufactures to customer order using the job order cost system. For the month just ended, it registered the following data:

Beginning work in process: P300,000

Cost of Orders completed: 2,400,000

Cost of Orders shipped: 2,000,000

Materials issued for the month: 1,700,000

Direct labor cost: 800,000

Factory overhead rate: 150% of direct labor cost

The ending work in process inventory was:

Select one:

a. P1,400,000

b. P1,600,000

c. P500,000

d. P700,000

Answer 1

Option B is correct

Total cost for the month = Materials issued for the month +  Direct labor cost + Factory overhead

=  1,700,000 + 800,000 + 150% of 800,000

=  1,700,000 + 800,000 + 1,200,000

= 3,700,000

work in progress during this month = Total cost for the month - Cost of Orders completed

= 3,700,000 -  2,400,000

= 1,300,000

The ending work in process inventory = Beginning work in process + work in progress during this month

= P300,000 + P1,300,000

=P 1,600,000

Thank You...........................