Question

Naranjo Company designs industrial prototypes for outside companies. Budgeted overhead for the year was $490,000, and budgeted direct labor hours were 28,000. The average wage rate for direct labor is expected to be $35 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 $0 Beginning balance Materials requisitioned Direct labor cost 24,600 $35,500 $15,000 20,300 22,000 11,300 15,500 11,400 19,100 5,90 6,400 Overhead is assigned as a percentage of direct labor cost. During June, Jobs 39 and 40 were completed; Job 39 was sold at 115 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

1	Balance in Work - in - process as of June 30	=	$      60,325
2	Balance in Finished goods as of June 30	=	$      86,150
3	Cost of goods sold for June 30	=	$      62,000
4	Price charged for Job 39	=	$      71,300
	Workings:
		Job 39	Job 40	Job 41	Job 42
	Beginning Balance	$   24,600	$      35,500	$   15,000	0
	Materials Requisitioned	$   20,300	$      22,000	$   11,300	$   15,500
	Direct labor cost	$   11,400	$      19,100	$     5,950	$     6,400
	Prime cost	$   56,300	$      76,600	$   32,250	$   21,900
	Overhead cost (50% of Direct labor cost)	$     5,700	$        9,550	$     2,975	$     3,200
	Cost of goods sold	$   62,000
	Finished goods		$      86,150
	Work - in - process			$   35,225	$   25,100
	Budgeted overheads	=	$ 4,90,000
	Expected overheads (280000 X $35)	=	$ 9,80,000
	Percentage of overheads	=	$490000 / $980000
		=	50%
1	Balance in Work - in - process as of June 30	=	$35225 + $25100
		=	$      60,325
2	Balance in Finished goods as of June 30	=	$      86,150
3	Cost of goods sold for June 30	=	$      62,000
4	Price charged for Job 39	=	$62000 X 1.15
		=	$      71,300