Question

Renaissance Gallery converts photographs to portraits via a tedious hand painting process. Costs are

tracked for each painting, with gallery overhead being applied at 130% of direct labor cost.

Renaissance Gallery began June with one job in process. This job related to the Price Wedding photo, and beginning work in process included total costs of $15,500 (direct labor, direct material, and applied overhead).

During June, four new jobs were begun. These consisted of the Ramirez family portrait, the Oberweiss farm photo, the Ravenwood big fish picture, and the Zhang baby picture. The only job remaining in process at the end of June was the Ravenwood big fish picture.

To date, $14,000 in direct labor and $4,400 of direct materials had been committed to the Ravenwood job.

Total direct labor incurred on all jobs during June was $70,100 Total direct material incurred on all jobs during June was $12,700.

(a) Compute the ending work in process inventory balance and the total cost assigned to finished jobs.

	A.	2(a) Ending work in process 36,820 2(a) Total costs assigned to finished goods 152,960
	B.	2(a) Ending work in process 36,580 2(a) Total costs assigned to finished goods 152,760
	C.	2(a) Ending work in process 46,600 2(a) Total costs assigned to finished goods 172,830
	D.	2(a) Ending work in process 36,600 2(a) Total costs assigned to finished goods 152,830
	E.	2(a) Ending work in process 36,420 2(a) Total costs assigned to finished goods 152,940
	F.	None of the above

Answer 1

Answer D.

2(a) Ending work in progress = 36600

2(b) Total costs assigned to finished goods = 152830

Calculations

Ending work in progress

Direct labour. 14000

+ Direct material. 4400

+ Overhead (14000*130%). 18200

Total wip. 36600

calculation of total cost assigned to finished goods

Opening WIP. 15500

+ Direct labour(70100-14000). 56100

+ Material. (12700-4400). 8300

+ Overhead (56100*130%). 72930

Total.   152830