The Bus Company uses a job-order costing system. The following information was recorded for September:$\begin{array}{l}
\text { Added During September }\
\begin{array} { | l | r | r | r | }
\hline \text { Job Number } & \begin{array} { r }
\text { September 1 } \
\text { Inventory }
\end{array} & \text { Direct Materials } & \text { Direct Labour } \
\hline 1 & \$ 1,000 & \$ 300 & \$ 200 \
\hline 2 & 1,400 & 250 & 300 \
\hline 3 & 500 & 1,500 & 150 \
\hline 4 & 750 & 4,000 & 400 \
\hline
\end{array}
\end{array}$The direct labour wage rate is $10 per hour. Overhead is applied at the rate of $5 per direct labour hour. Jobs 1, 2, and 3 have been completed and transferred to finished goods. Job 2 has been delivered to the customer.
-What is the ending Work in Process inventory?
A) $7,575.
B) $5,350.
C) $4,325.
D) $5,150.

Question

The Bus Company uses a job-order costing system. The following information was recorded for September:$\begin{array}{l}
\text { Added During September }\
\begin{array} { | l | r | r | r | } 
\hline \text { Job Number } & \begin{array} { r } 
\text { September 1 } \
\text { Inventory }
\end{array} & \text { Direct Materials } & \text { Direct Labour } \
\hline 1 & \$ 1,000 & \$ 300 & \$ 200 \
\hline 2 & 1,400 & 250 & 300 \
\hline 3 & 500 & 1,500 & 150 \
\hline 4 & 750 & 4,000 & 400 \
\hline
\end{array}
\end{array}$The direct labour wage rate is $10 per hour. Overhead is applied at the rate of $5 per direct labour hour. Jobs 1, 2, and 3 have been completed and transferred to finished goods. Job 2 has been delivered to the customer.
-What is the ending Work in Process inventory?
A) $7,575.
B) $5,350.
C) $4,325.
D) $5,150.

Quizplus · Accepted Answer

The ending Work in Process inventory includes only Job 4, as Jobs 1, 2, and 3 have been completed and transferred out of Work in Process. To calculate the cost of Job 4, add the September 1 inventory ($750), direct materials ($4,000), and direct labor ($400). Direct labor hours are calculated by dividing the direct labor cost by the wage rate ($400 / $10 = 40 hours). Overhead is applied at $5 per direct labor hour, so for 40 hours, it's $200 ($5 * 40). The total cost of Job 4 is $750 + $4,000 + $400 + $200 = $5,350.

The Bus Company Uses a Job-Order Costing System The Direct Labour Wage Rate Is $10 Per Hour