Question
Norm's Furniture Company manufactures custom furniture only and uses a job order costing system to accumulate costs. Actual direct materials and direct labor costs are
Norm's Furniture Company manufactures custom furniture only and uses a job order costing system to accumulate costs. Actual direct materials and direct labor costs are accumulated for each job, but a predetermined overhead rate is used to apply manufacturing overhead costs to individual jobs. Manufacturing overhead is applied on the basis of direct labor hours. In computing a predetermined overhead rate, the controller estimated that manufacturing overhead costs for the year would be $200,000 and direct labor hours would be 20,000. The followingsummaryinformation is available for the year. Note: This summary information represents cost data related to hundreds of different job orders started or completed during the year.
a.Raw materials purchased during the year were $250,000.
b.Raw materials used in production during the year were $230,000.
c.Wages paid to the furniture craftsmen during the year totaled $440,000 (22,000 hours).
d.Wages paid to factory maintenance workers during the year totaled $65,000.
e.Depreciation on machinery and equipment during the year was $100,000.
f.Rent and utilities for the factory building during the year totaled $30,000.
g.Manufacturing overhead was applied to Work-in-Process Inventory using the predetermined overhead rate.
h.Work-in-Process Inventory costing $800,000 was completed and transferred to Finished Goods Inventory.
i.Goods costing $750,000 were sold.
Assume that the beginning balance in the Finished Goods Inventory account was $0. What is the ENDING balance in the Finished Goods Inventory account?
- $70,000
- $750,000
- $20,000
- $75,000
- $800,000
- $25,000
- $50,000
- $90,000
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