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 rate of 150% of direct labor cost. The total manufacturing costs added during the period is:

Answer 1

$440,000

Explanation:

Direct material:

= $195,000 - $30,000

= $165,000

Direct labor:

= $150,000 - $40,000

= $110,000

Manufacturing overhead:

150% of direct labor cost.

= $110,000 x 150 ÷ 100

= $16,500,000 ÷ 100

= $165,000

Total manufacturing costs:

= $165,000 + $110,000 + $165,000

= $275,000 + $165,000

= $440,000

The total manufacturing costs added during the period is: $440,000