Job Costs Using a Plantwide Overhead Rate
Perrin Company designs industrial prototypes for outside companies. Budgeted overhead for the year was $385,000, and budgeted direct labor hours were 22,000. The average wage rate for direct labor is expected to be $35 per hour. During June, Perrin Company worked on four jobs. Data relating to these four jobs follow:
Job 39 Job 40 Job 41 Job 42
Beginning balance $23,300 $32,700 $15,000 $1,700
Materials requisitioned 18,600 20,800 10,500 15,800
Direct labor cost 9,700 17,900 5,150 6,700
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. Job 40 is the only job in Finished Goods Inventory and will remain there until the customer accepts delivery and pays. 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.
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2. Calculate the balance in Finished Goods as of June 30.
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3. Calculate the cost of goods sold for June.
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4. Calculate the price charged for Job 39. Round your answer to two decimal places.
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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?
Finished Goods would decrease
What would happen to the balance of Cost of Goods Sold?
Cost of Goods Sold would increase