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 product transferred to Finished Goods Inventory $558,500.
• $440,000.
• $413,000.
• $428,500.

Answer 1

Calculate cost of product transferred to finished goods :

Total manufacturing cost = Direct material used+direct labour+applied overhead

                                        = 165000+110000+(110000*150%)

Total manufacturing cost = 440000

Cost of product transferred to finished goods = 15500+440000-27000 = 428500

so answer is d) $428,500