Naranjo Company designs industrial prototypes for outside companies, Budgeted overhead for the year was $225,000, and budgeted direct labor hours were 15,000. 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 Beginning balance Materials requisitioned Direct labor cost 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 Dentory 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: $23,800 $34,300 18,300 23,400 9,400 20,500 6,850 Job 42 $19,200 $1,300 12,200 13,600 1. Calculate the overhead rate based on direct labor cost. % of direct labor cost 4,500
Naranjo Company designs industrial prototypes for outside companies, Budgeted overhead for the year was $225,000, and budgeted direct labor hours were 15,000. 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 Beginning balance Materials requisitioned Direct labor cost 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 Dentory 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: $23,800 $34,300 18,300 23,400 9,400 20,500 6,850 Job 42 $19,200 $1,300 12,200 13,600 1. Calculate the overhead rate based on direct labor cost. % of direct labor cost 4,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Job Costs Using a Plantwide Overhead Rate
Naranjo Company designs industrial prototypes for outside companies, Budgeted overhead for the year was $225,000, and budgeted direct labor hours
were 15,000. 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:
Beginning balance
Materials requisitioned
Direct labor cost
Job 39
Required:
$23,800
Job 41 Job 42
$34,300
$19,200 $1,300
23,400 12,200 13,600
4,500
20,500 6,850
Job 40
18,300
9,400
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 entory 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.
1. Calculate the overhead rate based on direct labor cost.
% of direct labor cost
2. Set up a simple job-order cost sheet for all jobs in process during June
Naranjo Company
Transcribed Image Text:1. Calculate the overhead rate based on direct labor cost.
% of direct labor cost
2. Set up a simple job-order cost sheet for all jobs in process during June.
Naranjo Company
Job Order Cost Sheets
Balance, June 1
Job 39
Total
Job 40
Job 41 Job 42
88
3. What if the expected direct labor rate at the beginning of the year was $24 instead of $30? What would the overhead rate be? If required, round
your overhead rate answer to one decimal place.
New budgeted direct labor cost-f
New overhead rate -
How would the cost of the jobs be affected?
% of direct labor cost
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