Question

Question 3 – Better Than That, Co. provides the following information:

• October 31 inventory of raw materials is $35,000.
• Raw materials purchases in November are $240,000.
• Total factory payroll cost (includes both direct and indirect labor) in November is $105,850.
• Actual factory overhead costs incurred in November are as follows: indirect materials, $15,900; indirect labor, $9,000; factory rent, $25,000; factory utilities, $23,880; and factory equipment depreciation, $42,000.
• The predetermined overhead rate is 120% of direct labor cost.
• Job L5 is sold to a customer in November for $255,000 on account.
• Costs related to the three jobs worked on in November follow.
  

	Job J1				Job L5				Job T2
Balances on October 31	:
Direct materials		$	0			$	0				$ 19,500
Direct labor			0				0				$6,850
Applied overhead			0				0				$8,220
Costs during November:
Direct materials			56,400				101,800			$	72,100
Direct labor			22,550				45,600				28,700
Applied overhead			?				?				?
Status on November 30	In process				Finished (sold)					Finished (unsold)

1. Prepare a schedule of cost of goods manufactured for November.

2. Calculate the firm’s gross profit for November.

Answer 1