Needham Company uses a job-order costing system.During the month of September,the company worked on three jobs.The job-order cost sheets for the three jobs contained the following information at the end of September: $$\begin{array} { l r r r }
& \text { Job A } & \text { Job B } & \text { Job C } \
\text { Beginning Balances } & \$ 4,000 &\$ 3 , 0 0 0 &\$ 6 , 0 0 0 \
\text { Direct Materials } & 1,000 & 1,600 & 2,000 \
\text { Direct Labor } & 2,400 & 4,600 & 1,800
\end{array}$$ The company applies overhead at 120% of direct labor cost.
During September Job B was completed,and it was sold in October.At the end of September the total cost in Work in Process was:
A) $36,960.
B) $22,240.
C) $26,400.
D) None of these answers are correct.

Question

Needham Company uses a job-order costing system.During the month of September,the company worked on three jobs.The job-order cost sheets for the three jobs contained the following information at the end of September: $$\begin{array} { l r r r } 
& \text { Job A } & \text { Job B } & \text { Job C } \
\text { Beginning Balances } & \$ 4,000 &\$ 3 , 0 0 0  &\$ 6 , 0 0 0 \
\text { Direct Materials } & 1,000 & 1,600 & 2,000 \
\text { Direct Labor } & 2,400 & 4,600 & 1,800
\end{array}$$ The company applies overhead at 120% of direct labor cost.
During September Job B was completed,and it was sold in October.At the end of September the total cost in Work in Process was:
A) $36,960.
B) $22,240.
C) $26,400.
D) None of these answers are correct.

Quizplus · Accepted Answer

The total cost in Work in Process at the end of September includes the costs for Job A and Job C, as Job B was completed. Calculate the total cost for each job:  - Job A: $4,000 (beginning) + $1,000 (materials) + $2,400 (labor) + 120% of $2,400 (overhead) = $4,000 + $1,000 + $2,400 + $2,880 = $10,280  - Job C: $6,000 (beginning) + $2,000 (materials) + $1,800 (labor) + 120% of $1,800 (overhead) = $6,000 + $2,000 + $1,800 + $2,160 = $11,960  Total Work in Process = $10,280 (Job A) + $11,960 (Job C) = $22,240

Needham Company Uses a Job-Order Costing System The Company Applies Overhead at 120% of Direct Labor Cost