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A single job absorbs $5,000 of materials, $4,000 of labor and $1,100 of applied overhead. What balance does Work in Process show?
A$9,000
B$6,100
C$10,100
D$11,200
Answer & Solution
Correct answer: C. $10,100
1. Materials moved to production give the first debit of $5,000.
2. Labor added to production gives the second debit of $4,000, taking the running balance to $9,000.
3. Overhead applied gives the third debit of $1,100, taking the running balance to $10,100.
4. $9,000 stops after only two of the three production costs, so it understates the job.
_Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 2.1 Introduction_
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