Question

Grant Marwick and Associates, a CPA firm, uses job order costing to capture the costs of its audit jobs. There were no audit jobs in process at the beginning of November. Listed below are data concerning the three audit jobs conducted during November. Rondelli Preston Lopez Direct materials: $900 $600 $300 Auditor labor costs: $5,900 $6,600 $3,700 Auditor hours: 88 45 Overhead costs are applied to jobs on the basis of auditor hours, and the predetermined overhead rate is $50 per auditor hour. The Rondelli job is the only incomplete job at the end of November. Actual overhead for the month was $10,700. How much is November ending balance of Work-in-Process? 1) $3,600 O2) $10,400 3) $6,800 O4) $11,600

Answer 1

• Ending balance in Work in Process = Total Cost of Rondelli job as this is the only one that is INCOMPLETE.
• Cost of Rondelling job
  = $ 900 material + $ 5900 labor cost + (72 auditor hour x $ 50 per audited hour)
  = 900 + 5900 + 3600
  = $ 10,400
• Correct Answer = Option #2: $ 10,400