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	$21,320	$6,300	$0
Direct materials	$10,490	$12,280	$16,210
Direct labor	$16,000	$12,150	$23,990
Machine hours	480	290	1,020

Overhead is applied to jobs at the rate of $16 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 $48,900 (consisting of Job 82 for $25,550 and Job 84 for $23,350).

Prull prices its jobs at cost plus 30%. During July, variable marketing expenses were 3% of sales, and fixed marketing expenses were $1,990; administrative expenses were $4,780. (Round all amounts to the nearest dollar.)

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

The operating income for the month of July is ( ).

Answer 1

Calculate operating income for July

	Job 82	Job 86	Total
Sales revenue	25550*1.3 = 33215	72137	105352
Cost of goods sold	25550	55490	81040
Gross profit	7665	16647	24312
Variable marketing expense	996	2164	3160
Fixed marketing expense			1990
Administrative expense			4780
Total operating expense			9930
Operating income			14382