Question

Naranjo Company designs industrial prototypes for outside companies. Budgeted overhead for the year was $160,000, and budgeted direct labor hours were 16,000. The average wage rate for direct labor is expected to be $20 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 $23,300 $32,900 $19,700 $700 Materials requisitioned 19,800 20,800 12,900 15,200 Direct labor cost 10,900 17,900 7,550 6,100 Overhead is assigned as a percentage of direct labor cost. During June, Jobs 39 and 40 were completed; Job 39 was sold at 120 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. $

 

Answer 1

Solution:-

Budgeted Direct Labor Cost = $20 (Average Wage Rate) X 16000 Hrs (Budgeted DLH)
Budgeted Direct Labor Cost = $320,000
Overhead Rate = $160,000 (Budgeted Overhead) / $320,000 (Budgted Direct Labor Cost)
Overhead Rate = 50% of Direct Labor Cost
	Job
	39	40	41	42
Beginning Balance	23,300	32,900	19,700	700
Direct Material	19,800	20,800	12,900	15,200
Direct Labor Cost	10,900	17,900	7,550	6,100
Overhead Applied - 50% of Direct Labor Cost	5,450	8,950	3,775	3,050
Total	59,450	80,550	43,925	25,050

1.

the balance in Work in Process as of June 30:

= Cost of(Job 41+ Job 42)

=$43,925+$25,050

=$68,975

2.

balance in Finished Goods as of June 30:

=Cost of Job 40

=$80,550

3.

cost of goods sold for June:

=Cost of Job 39

=$59,450

4.

price charged for Job 39:

=Cost of Job 39×120%

=$59,450×120%

=$71,340