SCHULTZ LAWNMOWER CO MAKES CUSTOM LAWNMOWERS FOR INDIVIDUAL CUSTOMERS. ON JULY 1

Question

SCHULTZ LAWNMOWER CO MAKES CUSTOM LAWNMOWERS FOR INDIVIDUAL CUSTOMERS. ON JULY 1, THERE WAS ONE JOB IN PROCESS, JOB 757, WITH A COST OF $45,650. JOBS 758, 759 AND 760 WERE STARTED DURING THE MONTH OF JULY. DATA ON COSTS ADDED DURING THE MONTH ARE AS FOLLOWS:

JOB 757 JOB 758 JOB 759 JOB 760
DIRECT MATERIALS $12,500 $6,740 $2,520 $7,870
DIRECT LABOR $5,880 $10,280 $3,760 $11,360

OVERHEAD IS APPLIED TO PRODUCTION AT THE RATE OF 85% OF DIRECT LABOR COST. JOB 760 WAS COMPLETED ON JULY 26 AND THE CLIENT WAS BILLED AT COST PLUS 45%. ALL OTHER JOBS REMAIN IN PROCESS.

1. IF SELLING AND ADMIN EXPENSES FOR THE MONTH OF JULY EQUALED $6,000, WHAT IS THE OPERATING INCOME FOR THE MONTH OF JULY?

2. WHAT IS COST OF GOODS SOLD FOR THE MONTH?

Explanation / Answer

1. cost of job 760 = 7870 + 11,360 + 11,360*0.85 = 28886. Sale price of job 760 = 28886*1.45 = 41884.70 Opearting income = 41884.70 - 28886 - 6000 = 6998.70 answer: $6998.70 2. Cost of goods sold = $28886.00 answer: $28886.00

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.