Bard Manufacturing uses a job order cost accounting system. During one month Bar

Question

Bard Manufacturing uses a job order cost accounting system. During one month Bard purchased $199,000 of raw materials on credit; issued materials to production of $196,000 of which $29,000 were indirect. Bard incurred a factory payroll of $151,000, paid in cash, of which $39,000 is classified as indirect labor. Bard uses a predetermined overhead application rate of 150% of direct labor cost. Bard's beginning and ending Goods in Process Inventory are $15,600 and $27,100 respectively. Compute the cost of product transferred to Finished Goods Inventory: A. $419900 B.$447000 C. $435500 D. $562600 E. $421900

Explanation / Answer

Indirect material and indirect labour are to be transfered to manufacturing overheads control account. Manufacturing overheads are absobder in direct labour hours method. The balance of unabsorbed manufacturing overhead should also go to manufacturing overhead control account.

Value $ a Opening Goods in Process 15600 b Material Issued to production 196000 c Less: indirect material 29000 d Direct Material issued (b-c) 167000 e Labour incurred 151000 f less: Indirect Labour 39000 g Direct Labor (e-f) 112000 h Overhead (150% of direct labour) 168000 i Total of Work in Progress(a+d+g+h) 462600 j less: Closing Goods in Process 27100 k Transfer to finished Goods (i-j) 435500

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