Question

During 2013, Tanner Manufacturing expected Job No. 26 to cost $300,000 of overhead, $500,000 of materials, and $200,000 in labor. Tanner applied overhead based on direct labor cost. Actual production required an overhead cost of $280,000, $550,000 in materials used, and $210,000 in labor. All of the goods were completed. What amount was transferred to Finished Goods?

Select one:

a. $1,000,000

b. $1,040,000

c. $1,060,000

d. $1,075,000

Answer 1

Step-by-step explanation:

The computation of the amount which is transferred to finished goods is shown below:

= Direct material + Direct labor + applied overhead

= $550,000 + $210,000 + $210,000 × 1.5

= $550,000 + $210,000 + $315,000

= $1,075,000

The computation of applied overhead is shown below:

= Direct labor × overhead cost ÷ labor cost

= $210,000 × $300,000 ÷ $200,000

= $210,000 × $1.5

= $315,000