Answer: $151,000
Explanation:
The fair value of the equipment is the amount that was less than the fair value of land by the amount of cash that the equipment owner had to pay to complete the transaction:
Fair value of equipment = Fair value of land - Cash paid by owner of equipment
= 172,000 - 21,000
= $151,000
During the year, Wright Company sells 500 remote-control airplanes for $120 each. The company has the following inventory purchase transactions for the year. Date Transaction Number of Units Unit Cost Total Cost Jan. 1 Beginning inventory 40 $ 68 $ 2,720 May. 5 Purchase 270 71 19,170 Nov. 3 Purchase 220 76 16,720 530 $ 38,610 Calculate ending inventory and cost of goods sold for the year, assuming the company uses specific identification. Actual sales by the company include its entire beginning inventory, 250 units of inventory from the May 5 purchase, and 210 units from the November 3 purchase.
Answer:
Wright Company
Cost of goods sold = $36,430
Ending inventory = $2,180
Explanation:
a) Data and Calculations:
Date Transaction Number of Units Unit Cost Total Cost
Jan. 1 Beginning inventory 40 $ 68 $ 2,720
May. 5 Purchase 270 71 19,170
Nov. 3 Purchase 220 76 16,720
Total available for sale 530 $ 38,610
Specific identification of Sales of 500 units:
Cost of goods sold:
Jan. 1 Beginning inventory 40 $ 68 $ 2,720
May. 5 Purchase 250 71 17,750
Nov. 3 Purchase 210 76 15,960
Total 500 $36,430
Cost of goods sold = $36,430
Ending inventory:
May. 5 Purchase 20 71 $1,420
Nov. 3 Purchase 10 76 760
Total 30 $2,180
Ending inventory = $2,180
To decrease the money supply, the Federal Reserve could a. decrease the required reserve ratio. b. conduct an open market purchase of U.S. Treasury securities. c. increase the discount rate. d. forbid the reselling of U.S. Treasury securities.
Answer: c. increase the discount rate.
Explanation:
The discount rate of a country is the rate at which the central bank in that country loans money out to the financial institutions.
When this rate is low, more financial institutions will borrow money as opposed to when it is high. Banks borrowing money increases the money supply in the economy so if the Federal Reserve wants to reduce money supply, it should increase the discount rate which would dissuade banks from borrowing from the Fed thereby limiting money supply.
explain consumptions of the principal of absolute advantage
Answer:
The Absolute Advantage Theory assumed that only bilateral trade could take place between nations and only in two commodities that are to be exchanged.
Explanation:
In economics, the principle of absolute advantage refers to the ability of a party (an individual, a firm, or a country) to produce more of a good or service than competitors while using the same amount of resources.
If the subtotal of the income statement debit column is $250,000, the subtotal of the income statement credit column is $300,000, and the total of the Statement of Retained Earnings debit column is $475,000, what is the beginning balance in Retained Earnings
Answer:
$425,000
Explanation:
Calculation to determine the beginning balance in Retained Earnings
First step is to prepare the Income Statement
Revenues $300,000
Less Expenses ($250,000)
Profit $50,000
Now let calculate the beginning balance in Retained Earnings
Using this formula
Beginning balance in Retained Earnings= Statement of Retained Earnings debit column -Income Statement Profit
Let plug in the formula
Beginning balance in Retained Earnings=$475,000-$50,000
Beginning balance in Retained Earnings=$425,000
Therefore the beginning balance in Retained Earnings is $425,000
Identify and explainthe benefits and problems associated with high economic growth
Answer:
Kindly check explanation
Explanation:
High economic growth is usually the aim of several economic policies whichnmost countries try to employ. The reason for this is no other than the numerous benefits attached to it which includes;
Increase in GDP : With growth in the economy of a country, trading within and outside these countries will rise, leading to increase in revenue earned and hence, the gross domestic product. This will pave the way for :
Infrastructural development : The development of infrastructure and standard society will be on the horizon as the economy grows. There is enough capital to embark on infrastructural development which will serve the populees
Other benefits include ; Trade and investment opportunities ; Increase in foreign direct investment and employment level will increase.
High economic growth also has it's drawbacks which include ;
Higj Immigration level ; Businesses and individuals are always on the lookout for areas with good investment opportunity in which an high income society is usually a main target. With increasing immigration, overcrowding may result.
Also, Investment cost may begin to rise, coupled with increase in foreign investment influx, the local market may be at risk of being able to compete.
Changes in the products for which a nation has a comparative advantage create sectoral shocks leading to an increase in frictional unemployment. a. True b. False
Answer: False
Explanation:
Frictional unemployment is a natural unemployment that results when people enter the labor force for the first time and when people move from one job to another. It is therefore not caused by sectoral shocks and every economy, even the best performing ones, will have frictional unemployment.
The unemployment that results from sectoral shocks is cyclical unemployment. This one is not natural and results from the business cycle and shocks to the economy.
ohn and Lisa form a partnership to operate a restaurant. Lisa signs a two-year lease on a space for the restaurant without consulting John. Under the legal concept of ________, John and the partnership are responsible for this lease, although it was only signed by Lisa.
Answer:
General Partnership
Explanation:
The legal concept of General Partnership obliges two or more signing partners -Lisa and John in this case- to share all assets, all liabilities, and to be responsible for all matters related to the business, regardless of who signs a contract, or contracts new debt, or acquires a new asset, and so on.
So under this legal concept, even if John did not sign the lease, he is still legally responsible for it.
Making a Decision as Chief Financial Officer: Contingent Liabilities
For each of the following situations, determine whether the company should (a) report a liability on the balance sheet, (b) disclose a contingent liability, or (c) not report the situation. Justify and explain your conclusions.
1. An automobile company introduces a new car. Past experience demonstrates that lawsuits will be filed as soon as the new model is involved in any accident The company can be certain that at least one jury will award damages to people injured in an accident.
2. A research scientist determines that the company’s best-selling product may infringe on another company’s patent. If the other company discovers the infringement and suit, your company could lose millions.
3. As part of land development for a new housing project, your company has polluted lake. Under state law, you must clean up the lake once you complete development project will take five to eight years to complete. Current estimates indicate it will cost $2 to $3 million to clean up the lake.
4. Your Company has just been notified that it lost a product liability lawsuit for $1 million that it plans to appeal. Management is confident that the company will on appeal, but the lawyears belive that it will lose.
5. A key customer is unhappy with the quality of a major construction project. The company belives that the customer is being unreasonable but, to maintain goodwill, has decided to do $250,000 in next year.
Answer:
sry need points
Explanation:
2019 2018 2017 2016 2015 Sales $ 282,880 $ 270,800 $ 252,600 $ 234,560 $ 150,000 Cost of goods sold 128,200 122,080 115,280 106,440 67,000 Accounts receivable 18,100 17,300 16,400 15,200 9,000 Compute trend percents for the above accounts, using 2015 as the base year.
Answer:
Sales
2019 Net Sales = 188.59%
2018 Net Sales = 180.53%
2017 Net Sales = 168.4%
2016 Net Sales = 156.37%
Cost of Goods Sold
2019Cost of Goods Sold = 191.34%
2018 Cost of Goods Sold = 182.21%
2017 Cost of Goods Sold = 172.06%
2016 Cost of Goods Sold = 158.87%
Accounts Receivable:
2019 Accounts Receivable = 201.11%
2018Accounts Receivable = 192.22%
2017Accounts Receivable = 182.22%
2016Accounts Receivable = 168.89%
Explanation:
Computation forn trend percents for the above accounts, using 2015 as the base year:
FOR SALES:
2019:
Net Sales = Sales 2019 / Sales 2015*100
Net Sales = $282,880 / $150,000 * 100
Net Sales = 188.59%
2018:
Net Sales = Sales 2018 / Sales 2015*100
Net Sales = $270,800 / $150,000 * 100
Net Sales = 180.53%
2017:
Net Sales = Sales 2017 / Sales 2015*100
Net Sales = $252,600 / $150,000 * 100
Net Sales = 168.4%
2016:
Net Sales = Sales 2016 / Sales 2015*100
Net Sales = $234,560 / $150,000 * 100
Net Sales = 156.37%
COST OF GOODS SOLD:
2019:
Cost of Goods Sold = Cost of Goods Sold 2019 / Cost of Goods Sold 2015 *100
Cost of Goods Sold = $128,200 / $67,000 * 100
Cost of Goods Sold = 191.34%
2018:
Cost of Goods Sold = Cost of Goods Sold 2018 / Cost of Goods Sold 2015 *100
Cost of Goods Sold = $122,080 / $67,000 * 100
Cost of Goods Sold = 182.21%
2017:
Cost of Goods Sold = Cost of Goods Sold 2017 / Cost of Goods Sold 2015 *100
Cost of Goods Sold = $115,280 / $67,000 * 100
Cost of Goods Sold = 172.06%
2016:
Cost of Goods Sold = Cost of Goods Sold 2016 / Cost of Goods Sold 2015 *100
Cost of Goods Sold = $106,440 / $67,000 * 100
Cost of Goods Sold = 158.87%
ACCOUNTS RECEIVABLE:
2019:
Accounts Receivable = Accounts Receivable 2019 / Accounts Receivable 2015 * 100
Accounts Receivable = $18,100 / $9,000 * 100
Accounts Receivable = 201.11%
2018:
Accounts Receivable = Accounts Receivable 2018 / Accounts Receivable 2015 * 100
Accounts Receivable = $17,300 / $9,000 * 100
Accounts Receivable = 192.22%
2017:
Accounts Receivable = Accounts Receivable 2017 / Accounts Receivable 2015 * 100
Accounts Receivable = $16,400 / $9,000 * 100
Accounts Receivable = 182.22%
2016:
Accounts Receivable = Accounts Receivable 2016 / Accounts Receivable 2015 * 100
Accounts Receivable = $15,200 / $9,000 * 100
Accounts Receivable = 168.89%
Presented here are selected transactions for the Cullumber Company during April. Cullumber uses the perpetual inventory system. April 1 Sold merchandise to Mann Company for $4,200, terms 2/10, n/30. The merchandise sold had a cost of $3,000. 2 Purchased merchandise from Wild Corporation for $8,500, terms 1/10, n/30. 4 Purchased merchandise from Ryan Company for $1,100, n/30. 10 Received payment from Mann Company for purchase of April 1 less appropriate discount. 11 Paid Wild Corporation for April 2 purchase. Journalize the April transactions for Cullumber Company
Answer:
Cullumber Company
Journal Entries:
April 1 Debit Accounts receivable (Mann Company) $4,200
Credit Sales revenue $4,200
To record the sale of goods on credit terms, 2/10, n/30.
Debit Cost of goods sold $3,000
Credit Inventory $3,000
To record the cost of goods sold.
April 2 Debit Inventory $8,500
Credit Accounts payable (Wild Corporation) $8,500
To record the purchase of goods on credit terms, 1/10, n/30.
April 4 Debit Inventory $1,100
Credit Accounts payable (Ryan Company) $1,100
To record the purchase of goods on credit terms, n/30.
April 10 Debit Cash $4,116
Debit Cash Discounts $84
Credit Accounts receivable (Mann Company) $4,200
To record the receipt of cash on account, including discounts.
April 11 Debit Accounts payable (Wild Corporation) $8,500
Credit Cash $8,415
Credit Cash Discounts $85
To record the payment on account, including discounts.
Explanation:
a) Data and Analysis:
April 1 Accounts receivable (Mann Company) $4,200 Sales revenue $4,200 terms 2/10, n/30.
Cost of goods sold $3,000 Inventory $3,000
April 2 Inventory $8,500 Accounts payable (Wild Corporation) $8,500 terms 1/10, n/30.
April 4 Inventory $1,100 Accounts payable (Ryan Company) $1,100 n/30.
April 10 Cash $4,116 Cash Discounts $84 Accounts receivable (Mann Company) $4,200
April 11 Accounts payable (Wild Corporation) $8,500 Cash $8,415 Cash Discounts $85
Universal Travel Inc. borrowed $498,000 on November 1, 2021, and signed a 12-month note bearing interest at 7%. Interest is payable in full at maturity on October 31, 2022. In connection with this note, Universal Travel Inc. should report interest payable at December 31, 2021, in the amount of
Answer: $2,905
Explanation:
The total interest that will be paid on the note is:
= 498,000 * 7%
= $34,860
This interest will have to be apportioned monthly over the year. The monthly interest (which will also be the December interest) is:
= 34,860 / 12 months
= $2,905
The financial statement that provides a snapshot view of the financial condition of a business at a point in time is the:
Answer:
balance sheet
Explanation:
Balance sheet can be regarded as financial statement which gives reports of the liabilities, equity of shareholders as well as assets of the company at a specific point in time, It provides a basis that can be used in computing rates of return as well as evaluating its capital structure.
It should be noted that balance sheet is
financial statement that provides a snapshot view of the financial condition of a business at a point in time
When one uses the after-tax weighted average cost of capital (WACC) to value a levered firm, the interest tax shield is A) not accounted for by the use of the WACC. B) considered by deducting the interest payment from the cash flows. C) automatically considered because the after-tax cost of debt is included within the WACC formula. D) capitalized by the levered cost of equity.
Answer: C) automatically considered because the after-tax cost of debt is included within the WACC formula.
Explanation:
When calculating the Weighted Average Cost of Capital (WACC) for a levered firm, the interest tax shield is included because the cost of debt used is adjusted for tax as shown below:
= (Weight of debt * Cost of debt( 1 - tax rate) ) + (Weight of equity * cost of equity)
As shown above, the interest tax shield is already implicit in the formula so there is no need to adjust the levered firm for an interest tax shield as this would lead to double-counting.
Westside Plumbing and Heating Company is offered a contract for$100,000 to provide plumbing for a new building. The labor and equip-ment costs are calculated to be $60,000 for fulfilling the contract. West-side has materials in its inventory to complete the job. The raw ma-terials initially cost the firm $50,000; however the material prices havedeclined in the interim and now cost only $37,500. Thus if thefirmchose not to accept the contract and sells the materials, they wouldincur a loss of $12,500. Material prices are not expected to go up inthe future. Should Westside accept the contract. Explain your answer.
Answer:
Westside Plumbing and Heating Company
Westside should accept the contract.
By accepting the contract at the price of $100,000, Westside incurs a total cost of $97,500 and makes a little profit of $2,500 ($100,000 - $97,500). The contract enables Westside to utilize the materials that it has in inventory instead of allowing it to deteriorate further in value.
Explanation:
a) Data and Calculations:
Contract price = $100,000
Labor and equipment costs = $60,000
Original cost of materials = $50,000
Materials market price = $37,500
Total costs to be incurred = $97,500 ($60,000 + $37,500)
Profit to be earned = $2,500 ($100,000 - $97,500)
A firm is evaluating the performance of two managers running a summer training program. One manager is in a large division with over 100 trainees, while the other is in a small division with only 15 trainees. What is one principle the firm should use in its evaluation
Answer:
Principle of equitable assessment
Explanation:
In simple words, the principle of equitable assessment refers to the concept which states that while comparing two subjects, the evaluation will be in such a way that the assessment will be fair to both the topics.
Hence, it should be made in such a way or should be made on those dimensions which consdier the differences between the two population.
A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 28, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the payment on July 28 is:
Answer:
Debit : Account Payable $1,600
Credit : Discount Received $32
Credit : Cash $1,568
Explanation:
The correct journal entry to record the payment on July 28 includes a Debit to Accounts Payable and Credit to Discount and Cash. Cash should be after returns and discount received.
Canton Company sells a motor that carries a 60-day unconditional warranty against product failure. From prior years' experience, Canton estimates that 3% of units sold each period will require repair at an average cost of $160 per unit. During the current period, Canton sold 100,000 units and repaired 2,400 of those units. (a) How much warranty expense must Canton report in its cur
Answer:
$480,000
Explanation:
Calculation to determine much warranty expense must Canton report
Using this formula
Warranty expense=Average cost per unit*Unit sold*Estimated percentage of units sold
Let plug in the formula
Warranty expense= $160*100,000*3%
Warranty expense=$480,000
Therefore warranty expense that Canton must report is $480,000
Strategic controls are largely subjective criteria intended to verify that the firm is using appropriate strategies for the conditions in the external environment and the company's competitive advantages.
A. True
B. False
Answer:
A. True
Explanation:
In Business management, a strategy can be defined as a set of guiding principles, actions and decisions that an organization combines so as to achieve its business goals, attract customers and possess a competitive advantage over its rivals in the industry.
Business strategy sets the overall direction for the business because it focuses on defining how a business would achieve its goals, objectives, and mission; as well as the funds and material resources required to implement or execute the business plan. The components of a business strategy includes the following;
I. Value.
II. Vision.
III. Mission.
Basically, strategic controls are subjective criteria that are developed by a business firm so as to verify and ensure that the business firm has implemented the appropriate strategies for the conditions in the external environment and the competitive advantages of the business firm.
The fund has 49,000 shares and liabilities of $124,000. Assume the fund is sold with a front-end load of 2.5 percent. What is the offering price of the fund
Answer: $49.81
Explanation:
The offering price is calculated as:
= NAV per share / (100 - front-end load)
NAV per share = (Value - liabilities) / Number of shares
= [ ( 12,000 * 86) + (32,000 * 15) + (3,500 * 69) + (75,000 * 10) - 124,000] / 49,000 mutual fund shares
= 2,379,500 / 49,000
= $48.56
Offering price = 48.56 / (100 - 2.5%)
= $49.81
Sayid is the sole shareholder of an S corporation in Hattiesburg, Mississippi. At a time when his stock basis is $20,000, the corporation distributes appreciated property worth $40,000 (basis of $20,000). There is no built-in gain. Sayid's taxable gain is:
Answer:
$20,000
Explanation:
The computation of the taxable gain is shown below:
The corporate gain is
= $40,000 - $20,000
= $20,000
Now the stock basis is increased i.e.
= $20,000 + $20,000
= $40.000
Now the stock basis decreased to zero i.e.
= $40,000 - $40,000
= $0
So, here the taxable gain is of $20,000
The following condensed balance sheet is for the partnership of Hardwick, Saunders, and Ferris, who share profits and losses in the ratio of 4:3:3, respectively:
Cash $83,000 Accounts payable $208,000
Other assets 765,000 Ferris, loan 44,000
Hardwick, loan 34,000 Hardwick, capital 280,000
Saunders, capital 180,000
Ferris, capital 170,000
Total assets $882,000 Total liabilities and capital $882,000
The partners decide to liquidate the partnership. Forty percent of the other assets are sold for $240,000. Prepare a proposed schedule of liquidation at this point in time.
Answer:
Here the answer is given as follows,
A company ages its accounts receivables to determine its end of period adjustment for bad debts. At the end of the current year, management estimated that $22,750 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a credit balance of $445. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense
Answer:
The appropriate answer is "$22,305".
Explanation:
The given values are:
Estimated uncollectible,
= $22,750
Credit balance in allowance,
= $445
Now,
The bad debt expense will be:
= [tex]Estimated \ uncollectible-Credit \ balance \ in \ allowance[/tex]
By substituting the values, we get
= [tex]22750-445[/tex]
= [tex]22305[/tex] ($)
Blue Spruce Corp. reported net income of $377000 for the year. During the year, accounts receivable increased by $27000, accounts payable decreased by $12000 and depreciation expense of $59000 was recorded. Net cash provided by operating activities for the year is
Answer:
The correct solution is "$397000".
Explanation:
Given:
Net income,
= $377000
Depreciation,
= $59000
Accounts receivable increase,
= $27000
Accounts payable decreased,
= $12000
Now,
From operating activities, the cash flow will be:
= [tex]Net \ income+ Depreciation-Account \ receivable \ increase-Accounts \ payable \ decrease[/tex]By putting the values, we get
= [tex]377000 + 59000 - 27000 - 12000[/tex]
= [tex]397000[/tex] ($)
Boats and Bait has 78,000 shares outstanding that sell for a price of $74 per share. The stock has a par value of $2 per share. The company's balance sheet shows capital surplus of $185,000 and retained earnings of $225,000. If the company declares a stock dividend of 17.5 percent, what is the new common stock value on the balance sheet?
Answer:
$183,300
Explanation:
The computation is shown below:
Value of common stock value on the balance sheet prior to the stock dividend is
= No of stock outstanding × Face value per share
= 78,000 × $2
= $156,000
Now
New shares to be issued is
= 78,000 × 0.175
= 13,650 shares
So,
Total shares outstanding after stock issue is
= 78,000 + 13,650
= 91,650 shares
Now the value of common stock after stock dividend is
= 91,650 × $2
= $183,300
For each of the following products and services, indicate whether it is more likely produced in a process operation or in a job order operation.
1. Beach towels
2. Bolts and nuts
3. Lawn chairs
4. Headphones
5. Designed patio
Answer:
Process operations are for when there are multiple goods to be produced. These products normally have the same specifications so can be mass produced.
This is different from Job order operation which is used when a single good is product. It is usually used for customized goods.
Process operations:
Beach towels Bolts and nuts Lawn chairs HeadphonesJob Order operation
Designed patio.Service Pro Corp (SPC) is preparing adjustments for its September 30 year- end. For the following transactions and events, show the September 30 adjusting entries that SPC would make
a. Prepaid Insurance shows a balance of zero at September 30, but Insurance Expense shows a debit balance of $2,340, representing the cost of a three-year fire insurance policy purchased on September 1 of the current year.
b. On August 31 of this year, Cash was debited and Service Revenue was credited for $ 1,500. The $ 1,500 related to fees for a three- month period beginning September 1 of the current year.
c. The company’s income tax rate is 20%. After making the above adjustments, SPC’s net income before tax is $ 10,000. No income tax has been paid or recorded.
Answer:
1 . Dr Prepaid Insurance $2,275
Cr Insurance Expense $2,275
2. Dr Service Revenue $1,000
Cr Deferred Revenue $1,000
3. Dr Income Tax Expense $2,000
Cr Income Tax Payable $2,000
Explanation:
Preparation of the journal entries
1 . Dr Prepaid Insurance $2,275
Cr Insurance Expense $2,275
($2,340 - $2,340 × 1 months ÷ 36 months
= $2,340 - $65
= $2,275)
2. Dr Service Revenue $1,000
Cr Deferred Revenue $1,000
($ 1,500 × 2 months ÷ 3 months
= $1,000)
3. Dr Income Tax Expense $2,000
Cr Income Tax Payable $2,000
(.20*$10,000)
A Brazilian steel manufacturer started selling certain categories of steel in the United States. However, the Brazilian manufacturer is selling the steel at a price significantly lower than it sells the same product back in Brazil. This practice may be a violation of U.S. law.
a) true
b) false
Answer:
This practice may be a violation of U.S. law.
a) true
Explanation:
To protect local industries from unfair competition from other countries, the US enforces antidumping and countervailing laws. The laws seek to investigate, prevent, and impose adequate tariffs on imported goods that are priced lower in the U.S. market than in the exporting country's market or imported goods that are subsidized by the exporting country's government.
In order to successfully carry out an acquisition, the managers at Pink Inc. prepared a list of potential target companies that it could purchase. In the next step, the managers evaluated each prospective company in depth to understand their methods of operations, processes, procedures, strengths, and limitations in order to choose the best target company. This process of evaluating the companies is best known as:___________.
A- Due diligence
B- Market intelligence
C- Consultation
D- Market evaluation
Answer:
A- Due diligence
Explanation:
Due diligence is an investigation, audit or the review that to be performed in order to confrim the facts within the consideration. It needs the examination of the financial records prior entered into the upcoming transaction with the other party
So as per the given situation, the first option is correct
In a sandwich shop, 3 workers are able to make 45 sandwiches in an hour during the lunch rush. When a 4th worker is added, the team is able to make 57 sandwiches. Calculate the marginal product of adding the 4th worker.
Answer:
12
Explanation:
Calculation to determine the marginal product of adding the 4th worker
Using this formula
MP=ΔTPΔL
Let plug in the formula
ΔTP=57−45
ΔTP=12
Therefore The marginal product of adding the 4th worker is 12 sandwiches.
Predetermined Overhead Rate, Application of Overhead to Jobs, Job Cost, Unit Cost On August 1, Cairle Company's work-in-process inventory consisted of three jobs with the following costs: Job 70 Job 71 Job 72 Direct materials $1,600 $2,000 $850 Direct labor 1,900 1,300 900 Applied overhead 1,425 975 675 During August, four more jobs were started. Information on costs added to the seven jobs during the month is as follows: Job 70 Job 71 Job 72 Job 73 Job 74 Job 75 Job 76
Direct materials $800 $1,235 $3,550 $5,000 $300 $560 $80 Direct labor 1,000 1,400 2,200 1,800 600 860 172
Before the end of August, Jobs 70, 72, 73, and 75 were completed. On August 31, Jobs 72 and 75 were sold.
Required:
1. Calculate the predetermined overhead rate based on direct labor cost.
% of direct labor cost.
2. Calculate the ending balance for each job as of August 31.
Ending Balance
Job 70 $
Job 71 $
Job 72 $
Job 73 $
Job 74 $
Job 75 $
Job 76 $
3. Calculate the ending balance of Work in Process as of August 31.
$
4. Calculate the cost of goods sold for August.
$
5. Assuming that Cairle prices its jobs at cost plus 20 percent, calculate Cairle’s sales revenue for August.
Answer:
Cairle Company
1. The predetermined overhead rate based on direct labor cost is:
= 75% of direct labor cost.
2. August 31 Ending Balances:
Job 70 $7,475
Job 71 $7,960
Job 72 $9,825
Job 73 $8,150
Job 74 $1,350
Job 75 $2,065
Job 76 $384
3. Ending balance of Work in Process, August 31:
= $9,694
4. The cost of goods sold for August = $11,890
5. Sales revenue for August = $14,268
Explanation:
a) Data and Calculations:
Work in process inventory on August 1:
Job 70 Job 71 Job 72 Job 73 Job 74 Job 75 Job 76
Direct materials $1,600 $2,000 $850
Direct labor 1,900 1,300 900
Applied overhead 1,425 975 675
Direct materials $800 $1,235 $3,550 $5,000 $300 $560 $80
Direct labor 1,000 1,400 2,200 1,800 600 860 172
Applied overhead 750 1,050 1,650 1,350 450 645 129
Total costs $7,475 $7,960 $9,825 $8,150 $1,350 $2,065 $384
Work in Process:
Job 71 $7,960
Job 74 1,350
Job 76 384
Total $9,694
Cost of goods sold:
Job 72 $9,825
Job 75 $2,065
Total $11,890
Sales revenue = $14,268 ($11,890 * 1.20)
