Required:
Naranjo Company designs industrial prototypes for outside companies. Budgeted
| Job 39 | Job 40 | Job 41 | Job 42 | |
| Beginning balance | $22,000 | $34,600 | $18,100 | $1,400 |
| Materials requisitioned | 18,300 | 23,600 | 11,600 | 13,500 |
| Direct labor cost | 9,400 | 20,700 | 6,250 | 4,400 |
Overhead is assigned as a percentage of direct labor cost. During June, Jobs 39 and 40 were completed; Job 39 was sold at 120 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 overhead rate based on direct labor cost.
2. Set up a simple
| Job 39 | Job 40 | Job 41 | Job 42 | |
| Balance, June 1 | ||||
| Total |
3. What if the expected direct labor rate at the beginning of the year was $28 instead of $35? What would the overhead rate be? If required, round your overhead rate answer to one decimal place.
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