Question

Job Costs Using a Plantwide Overhead Rate Naranjo Company designs industrial prototypes for outside companies. Budgeted overhead for the year was $250,000, and budgeted direct labor hours were 20,000. The average wage rate for direct labor is expected to be $25 per hour. During June, Naranjo Company worked on four jobs. Data relating to these four jobs follow: Job 39 Job 40 Job 41 Job 42 Beginning balance $22,700 $35,900 $17,500 $1,700 Materials requisitioned 20,200 21,400 11,800 12,100 Direct labor cost 11,300 18,500 6,450 3,000 Overhead is assigned as a percentage of direct labor cost. During June, Jobs 39 and 40 were completed; Job 39 was sold at 125 percent of cost. (Naranjo had originally developed Job 40 to order for a customer; however, that customer was near bankruptcy and the chance of Naranjo being paid was growing dimmer. Naranjo decided to hold Job 40 in inventory while the customer worked out its financial difficulties. Job 40 is the only job in Finished Goods Inventory.) Jobs 41 and 42 remain unfinished at the end of the month. Required: 1. Calculate the balance in Work in Process as of June 30. $ 2. Calculate the balance in Finished Goods as of June 30. $ 3. Calculate the cost of goods sold for June. $ 4. Calculate the price charged for Job 39. Round your answer to the nearest cent. $ 5. What if the customer for Job 40 was able to pay for the job by June 30? What would happen to the balance in Finished Goods? - Select your answer -Finished Goods would increaseFinished Goods would decreaseFinished Goods would not changeItem 5 What would happen to the balance of Cost of Goods Sold? - Select your answer -Cost of Goods Sold would increaseCost of Goods Sold would decreaseCost of Goods Sold would not changeItem 6

Answer 1

OH rate per DLH
Estimated Overheads			250000
Divide: DLH			20000
OH rate per DLH			12.5
Job Cost sheet
			Job 39	Job 40	Job 41	Job 42
Direct labour cost			11300	18500	6450	3000
Divide: Rate per DLH			25	25	25	25
DLH			452	740	258	120
Beginning Cost			22700	35900	17500	1700
Add: Current cost
Material			20200	21400	11800	12100
labour			11300	18500	6450	3000
Overheads OH @ 12.50			5650	9250	3225	1500
Total COST			59850	85050	38975	18300
STATUS			SOLD	FG	WIP	WIP
Rreq 1.
Ending WIP:
Job No. 41		38975
Job No. 42		18300
Ending WIP:		57275
Req 2.
Balance of FG:
Job No. 40:		85050
Req 3.
Cost of goods sold (Job no. 39):			59850
Req 4.
Price of Job 39:
Cost of goods sold			59850
Add: Profit @ 25%			14962.5
Price of Job 39:			74812.5
Req 5.
When Job nO.40 is sold off:
balance of FG is decreased by 85050
And cost of goods sold is increased by 85050