Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $217,200 of raw materials on credit; issued materials to production of $211,000 of which $34,800 were indirect. Minstrel incurred a factory payroll of $159,600, of which $44,800 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 $17,100 and $30,200 respectively. Compute the cost of product transferred to Finished Goods Inventory:

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andromache andromache · Answer 1 · 2019-09-25T13:58:50+02:00

Answer:

The cost of product transferred to Finished Goods Inventory is $450,100

Explanation:

The computation of the cost of the product transferred to Finished Goods Inventory is shown below:

= Beginning Work in Process Inventory + direct material + direct factory payroll + overhead cost - Ending Work in Process Inventory

where,

Direct material = Total material - indirect material

= $211,000 - $34,800

= $176,200

Direct factory payroll = Total factory payroll - indirect labor

= $159,600 - $44,800

= $114,800

Overhead cost = 150% of direct labor cost

= 150% × $114,800

= $172,200

The other items values would remain the same

Now put these values to the above formula

So, the value would equal to

= $17,100 + $176,200 + $114,800 + $172,200 - $30,200

= $450,100