Cook Builders 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 estimate that manufacturing overhead costs for the year would be $200,000 and direct labor hours would be 20,000. The following summary information is available for the year.
Raw materials purchased during the year were $275,000.
Raw materials used in production during the year were $250,000.
Wages paid to the furniture craftsmen during the year totaled $440,000 (22,000 hours).
Wages paid to factory maintenance workers during the year totaled $60,000.
Depreciation on machinery and equipment during the year totaled $90,000.
Rent and utilities for the factory building during the year totaled $45,000.
Manufacturing overhead was applied to work-in-process inventory using the predetermined overhead rate.
Work-in-process inventory costing $850,000 was completed and transferred to finished goods inventory.
Goods costing $800,000 were sold.
Assume that the beginning balance in the finished goods inventory account was $0. What is the ending balance of the finished goods inventory account?
A. $800,000
B. $25,000
C. $50,000
D. $75,000
E. $850,000
