Question

Job Costs Using a Plantwide Overhead Rate

Naranjo Company designs industrial prototypes for outside companies. Budgeted overhead for the year was $225,000, and budgeted direct labor hours were 18,000. 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 $24,800 $32,500 $15,400 $1,600
Materials requisitioned 20,400 23,200 10,400 13,400
Direct labor cost 11,500 20,300 5,050 4,300

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?

What would happen to the balance of Cost of Goods Sold?

Answer 1

Job Cost sheet
		Job No. 39	Job No.40	Job No. 41	Job No 42
Beginning cost		24800	32,500	15400	1600
Add: Current cost
Material		20400	23,200	10400	13400
labour		11500	20,300	5050	4300
Overheads		5750	10,150	2525	2150
Total cost		62450	86,150	33375	21450
Status		Sold	FG	WIP	WIP
Note: OH rate based on DLC:
Overheads budgeted			225000
Divide: Direct labour cost
Labour hours		18000
Labour rate		25	450000
OH rate			50% of DLC
Req 1.
WIP balance:
Job 41	33375
Job 42	21450
Total	54825
Req 2.
FG balance (Job 40)		86150
Req 3.
Cost of goods sold (Job 39)			62,450.00
Req 4.
Price charged for Job 39:
Cost of Job			$62,450
Add: Markup 25%of cost			$15,612.50
Selling price of Job 39			$78,063
Req 5.
If Job 40 is sold off, then:
FG balance		Nil
COGS:
Job 39		62450
Job 40		86150
Total COGS		148600