More than expected More than expected More than expected Less than expected Opti

Question

More than expected More than expected More than expected Less than expected Option D Billy Baroo Company uses a job order cost system. The following information was found in the Work-in-Process account for the month of Ju Amount [Dr.or (Cr.)] 12,000 87 Date Description July 1 uly 31 July 31 July 31 July 31 Balance Direct labor Direct materials ,00038,000 52,000 1 actofer te finished sooda 22,000 Transfer to finished goods (80,00O) Billy Baroo applies verheadto production at a predetermined rate of 80% bas do n hedirect labor cost. Job #23, the lyjob still inprocessattheendofJuly, has been chargedwith direct aboro $12,000 Direct material chargedtoJob#23was A. $22 B. $24,000 27,000 D. $29,400 E. $30,400

Explanation / Answer

Option A seems to be correct.

First, we need to calculate closing balance of WIP.

$12,000 + 38,000 + 52,000 + 22,000 - 80,000 = $44,000

Now, we need to calculate material balance in closing WIP (job 23)

Ending balance in WIP$44,000 - $12,000 - (.8x$12,000) = $22,400 (ending balance less labor and OH).

Please let me know for clarification required.

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