Accounting: Naranjo Company designs industrial prototypes

Accounting: Naranjo Company designs industrial prototypes

Subject: Business    / Accounting
Question
Job Costs Using a Plantwide Overhead Rate

Naranjo Company designs industrial prototypes for outside companies. Budgeted overhead for the year was $375,000, and budgeted direct labor hours were 25,000. The average wage rate for direct labor is expected to be $30 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    $26,700    $34,100    $18,500    $700
Materials requisitioned    19,900    22,600    10,900    15,500
Direct labor cost    11,000    19,700    5,550    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 110 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.

$

5. What if the customer for Job 40 was able to pay for the job by June 30? What would happen to the balance in Finished Goods?

– Select your answer -Finished Goods would increaseFinished Goods would decreaseFinished Goods would not changeItem 5

What would happen to the balance of Cost of Goods Sold?

– Select your answer -Cost of Goods Sold would increaseCost of Goods Sold would decreaseCost of Goods Sold would not changeItem 6