The Fabricating Department started the current month with a beginning Work in Pr

Question

The Fabricating Department started the current month with a beginning Work in Process inventory of $11,700. During the month, it was assigned the following costs: direct materials, $77,700; direct labor, $25,700; and factory overhead, 60% of direct labor cost. Also, inventory with a cost of $117,500 was transferred out of the department to the next phase in the process. The ending balance of the Work in Process Inventory account for the Fabricating Department is: Multiple Choice $188,792. $115,100. $13,020. $71,292 $69,220

Explanation / Answer

Total Manufacturing cost = Direct materials+Direct Labor+Factory Overhead

= $77,700+$25,700+($25,700*60%)

= $77,700+$25,700+$15,420 = $118,820

Cost to goods transferred to next process = Beg. WIP+Total Manufacturing cost-Ending WIP

$117,500 = $11,700+$118,820-Ending WIP

Ending WIP = $11,700+$118,820-$117,500 = $13,020

Therefore the ending balance of the Work in process inventory account for the Fabricating department is $13,020. Hence the correct option is C) $13,020.

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