Question

Z Company manufactures wooden, hand-carved figurines and uses a job order costing system. Last month on the “Pine” job, 180 units were made with 400 direct labor hours worked and $4,500 of direct materials used and $6,000 of direct labor used. Last month on the “Oak” job, 100 units were made with 200 direct labor hours worked and $2,700 of direct materials used and $3,000 of direct labor used. Last month on the “Cherry” job, 80 units were made with 140 direct labor hours worked and $2,000 of direct materials used and $2,100 of direct labor used. Manufacturing overhead cost is applied to job orders on the basis of direct labor hours at a predetermined rate of $10 per hour. The “Pine” and “Oak” jobs were completed during the month, and the “Cherry” job remained in work-in-process at the end of the month. The cost transferred to Finished Goods Inventory during the month was _____.

Group of answer choices

none of the other answers

A) $22,200

B) $20,300

C) $27,700

D) $16,200

Answer 1

Answer:

Option A: $22,200

Explanation:

Total cost calculation of the the "Pine" and "Oak" jobs are as following:

The total cost of Finished Goods Inventory includes the cost of goods with production completed (oak and Pine)

Cost	Pine	Oak
Direct Material	$4,500	$2,700
Direct Labor	$6,000	$3,000
Overhead Applied	4000*	2000**
Total Cost	14500	7700	22,200

Overhead applied = Direct labor Hours × Predetermined Overhead rate ($10)

* = 400 hours × $10 = $4,000

** = 200 Hours × $10 = $2,000