Needham Company uses a job order cost system. During the month of September, the

Question

Needham Company uses a job order cost 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:

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. None of these.

B. $22,240

C. $26,400

D. $36,960

Please show your work!

Job A Job B Job C Begginging balances $4000 $3000 $6000 Direct materials 1000 1600 2000 Direct Labor 2400 4600 1800

Explanation / Answer

Answer:

At the end of September the position is as under;

Job A (work in progress) Total Cost = $ 4,000 + $ 1,000 + $ 2,400 + $ 2,880 (120% of $ 2,400) = $ 10,280

Job B (completed and transferred to finished goods inventory); therefore, no cost in work in process

Job C (work in progress) Total Cost = $ 6,000 + $ 2,000 + $ 1,800 + $ 2,160 (120% of $ 1,800) = $ 11,960

Total Cost in Work in Process = $ 10,280 + $ 11,960 = $ 22,240

Therefore, the correct answer is Option B. $ 22,240.

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