WoodGrain Technology makes home office furniture from fine hardwoods. The compan

Question

 WoodGrain Technology makes home office furniture from fine hardwoods. The company operates two
departments, the preparation department and the fabrication department. Overhead costs are
applied to jobs using a plantwide pre-determined rate based on direct labor hours. At the
beginning of 2008, the company's management made the following estimates:

                   Preparation Department          Fabrication Department Overhead cost      $432,000                          $702,000 Machine hours        90,000                            25,000 Direct labor hours   35,000                            65,000 

 In April, WoodGrain began working on Job #127. Job #127, which was completed in May, consisted of 100 units. The company's cost records show the following information concerning Job #127: 

                   Preparation Department          Fabrication Department Direct material cost      $940                         $1,200 Direct labor cost         $710                           $980 Machine hours              350                             80 Direct labor hours          50                            150 

 During June, WoodGrain sold 60 units from Job #127 to a customer. It is the policy of WoodGrain to charge customers a price of 150% of total manufacturing costs for all jobs. 

 Calculate the amount of gross profit earned by WoodGrain from the sale of the 60 units. Enter
your answer with two places after the decimal point

Explanation / Answer

. Calculate the amount of gross profit earned by WoodGrain from the sale of the 60 units. ============================================================================================================================================================================================= Correct answer $2,139 ============================================================================================================================================================================================================================================================E PDR - Preparation = $432,000 /90,000 = $4.80 per machine hour =============================================================================================================================================================================================PDR - Fabrication = $702,000/ 65,000 = $10.80 per direct labor hour ============================================================================================================================================================================================= Direct materials Direct labor Overhead Preparation Overhead Total cost of Job #127 Units in Job #127 Cost per unit of Job #127 X 1.5 (mark-up) ============================================================================================================================================================================================= Selling price per unit Sales revenue Cost of goods sold Gross profit ============================================================================================================================================================================================= Job #127 $2,140+ 1,690+ 1,680 +1,620= $7,130/ 100 =$71.30 ============================================================================================================================================================================================= 1.50 $106.95 $6,417 $2,139 (940 + 1,200) (710 + 980) (4.80 x 350) (10.80 x 150) ($106.95 x 60) ($71.30 x 60) ==============================================================================================================================================================================================

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