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Juanita Corporation uses a job-order costing system and applies overhead on the basis of direct labor cost. At the end of October, Juanita had one job still in process. The job cost sheet for this job contained the following information: Direct materials $ 480 Direct labor $ 150 Manufacturing overhead applied $ 600 An additional $100 of labor was needed in November to complete this job. For this job, how much should Juanita have transferred to finished goods inventory in November when it was completed?

User Mnagel
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Final answer:

Juanita Corporation should transfer a total of $1730 to finished goods inventory for the job completed in November, which accounts for the initial costs and the additional direct labor and applied overhead.

Step-by-step explanation:

To calculate the total cost Juanita Corporation would transfer to finished goods inventory for the job completed in November, we need to add the additional direct labor cost of $100 to the previous total costs and then apply overhead based on the new total direct labor cost. The job cost initially was direct materials at $480, direct labor at $150, and applied manufacturing overhead at $600. When an additional $100 of labor is needed, the direct labor cost becomes $250 ($150 + $100).

Assuming that the rate of overhead application remains consistent, the overhead applied on the additional labor would be the overhead application rate times $100. Given that initially $600 of overhead was applied on $150 of direct labor, the overhead application rate is $600 / $150 = 4 (or 400%). Therefore, the overhead applied for the additional $100 direct labor is $100 * 4 = $400. Adding this to the initial overhead, we get a total applied overhead of $600 + $400 = $1000.

The total cost transferred to finished goods inventory is the initial direct materials, direct labor, and applied overhead plus the new direct labor and applied overhead: $480 + $250 + $1000 = $1730.

User Adam Lockhart
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Answer:

Total Cost of the Job $

Direct materials 480

Direct labour 150

Additional labour 100

Applied overhead 600

Total cost 1,330

The total amount to be transferred to finished goods inventory in November is $1,330.

Step-by-step explanation:

The total cost of the job is the total of direct material, direct labour, additional labour and manufacturing overhead applied. The additional labour cost is considered because it is required to complete the job.

User Jolvi
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