Question

Minstrel Manufacturing uses a job order costing system. During one month Minstrel purchased $205,200 of raw materials on credit; issued materials to production of $201,000 of which $31,800 were indirect. Minstrel incurred a factory payroll of $153,600, paid in cash, of which $41,800 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 $16,100 and $28,200 respectively. Compute the cost of product transferred to Finished Goods Inventory: a. $453,800. b. $575,900. c. $436,600. d. $427,600. e. $425,600.

Answer 1

c. $436,600

Step-by-step explanation:

Direct materials to production = $201,000 - $31,800 = $169,200

Direct factory payroll = $153,600 - $41,800 = $111,800

Minstrel uses a predetermined overhead application rate of 150% of direct labor cost, then overhead = 150% * $111,800 = $167,700

Cost of product produced in one month = direct materials to production of $169,200 +a direct factory payroll of $111,800 + overhead $167,700 = $448,700

The cost of product transferred to Finished Goods Inventory = Cost of product produced in one month + Beginning WIP Inventory - Ending WIP Inventory

= $448,700 + $16,100 - $28,200 = $436,600