Kelly Sportswear manufactures a specialty line of T-shirts.The company uses a job-order costing system.During March,the following costs were incurred on Job 1052:
Manufacturing overhead was applied at the rate of $25 per machine hour,and Job 1052 required 800 machine hours.In addition,selling and shipping costs of $7,000 were incurred.Job 1052 consisted of 7,000 shirts and was completed on March 24.The total cost of job 1052 transferred from Work in Process to Finished Goods on March 24 is:
A) $33,700
B) $38,500
C) $18,500
D) $20,000

Question

Kelly Sportswear manufactures a specialty line of T-shirts.The company uses a job-order costing system.During March,the following costs were incurred on Job 1052: 
Manufacturing overhead was applied at the rate of $25 per machine hour,and Job 1052 required 800 machine hours.In addition,selling and shipping costs of $7,000 were incurred.Job 1052 consisted of 7,000 shirts and was completed on March 24.The total cost of job 1052 transferred from Work in Process to Finished Goods on March 24 is:
A) $33,700 
B) $38,500 
C) $18,500 
D) $20,000

Quizplus · Accepted Answer

Direct materials cost for Job 1052 = $2,000 + $3,500 = $5,500

Direct labor cost for Job 1052 = 800 hours x $12 per hour = $9,600

Manufacturing overhead cost for Job 1052 = 800 hours x $25 per hour = $20,000

Total cost for Job 1052 = $5,500 + $9,600 + $20,000 + $7,000 (selling and shipping costs) = $42,100

Therefore, the total cost of Job 1052 transferred from Work in Process to Finished Goods on March 24 is $42,100.

Kelly Sportswear Manufactures a Specialty Line of T-Shirts