Question

Job-Order Cost Sheets, Balance in Work in Process and Finished Goods

Prull Company, a job-order costing firm, worked on three jobs in July. Data are as follows:

	Job 86	Job 87	Job 88
Balance, July 1	$21,370	$6,280	$0
Direct materials	$10,510	$12,350	$16,190
Direct labor	$16,040	$12,240	$24,030
Machine hours	500	290	980

Overhead is applied to jobs at the rate of $17 per machine hour. By July 31, Jobs 86 and 88 were completed. Jobs 82 and 86 were sold. Job 87 remained in process. On July 1, the balance in Finished Goods was $49,010 (consisting of Job 82 for $25,580 and Job 84 for $23,430).

Prull prices its jobs at cost plus 30%. During July, variable marketing expenses were 4% of sales, and fixed marketing expenses were $2,020; administrative expenses were $4,800. (Round all amounts to the nearest dollar.)

	Required:
1.	Prepare job-order cost sheets for all jobs in process during July, showing all costs through July 31.
2.	Calculate the balance in Work in Process on July 31.
3.	Calculate the balance in Finished Goods on July 31.
4.	Calculate Cost of Goods Sold for July.
5.	Calculate operating income for Prull Company for the month of July.

Answer 1

Prepare job-order cost sheets for all jobs in process during July, showing all costs through July 31.

	Job 86	Job 87	Job 88
Balance, July 1	$21,370	$6,280	$0
Direct materials	$10,510	$12,350	$16,190
Direct labor	$16,040	$12,240	$24,030
Overhead (Hour *Rate)	$8,500	$4,930	$16,660
Total	$56,420	$35,800	$56,880

Calculate the balance in Work in Process on July 31.

Work in Process = Job 87 = 35,800

Calculate the balance in Finished Goods on July 31.

Job 88	$56,880
Job 84	23430
Finished Goods on July 31	$80,310

Calculate Cost of Goods Sold for July.

Jobs 82	$25,580.00
Job 86	$56,420
Cost of Goods Sold for July	$82,000.00

Calculate operating income for Prull Company for the month of July.

Sales 82000*1.30	$106,600.00
Cost of Goods Sold for July	$82,000.00
Gross Profit	$24,600.00
Less variable marketing expenses	$4,264.00
Less fixed marketing expenses	2020
Less administrative expenses	4800
operating income	$13,516.00