Answered: Perrin Company designs industrial… | bartleby

FINANCIAL ACCOUNTING

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Perrin Company designs industrial prototypes for outside companies. Budgeted overhead for the year was $225,000, and budgeted direct labor hours were 18,000. The average wage rate for direct labor is expected to be $25 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 | $26,600 | $34,200 | $17,700 | $1,100 |
| Materials requisitioned | 20,700 | 20,000 | 10,100 | 15,900 |
| Direct labor cost | 11,800 | 17,100 | 4,750 | 6,800 |

Overhead is assigned as a percentage of direct labor cost. During June, Jobs 39 and 40 were completed; Job 39 was sold at 125 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.

**Exercise on Job Costing and Financial Adjustments**

**4. Calculate the price charged for Job 39.**
*Round your answer to two decimal places.*

[Input field for price]

**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?

[Dropdown menu for selection]

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

[Dropdown menu for selection]

**Instructions:**
- Consider the implications of early payment on financial statements and balances.
- Select the appropriate effect from the dropdown menus considering the practices of cost accounting and financial management.

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