ob Costs Using a Plantwide Overhead Rate Naranjo Company designs industrial prototypes for outside companies. Budgeted overhead for the year was $240,000, and budgeted direct labor hours were 16,000. The average wage rate for direct labor is expected to be $30 per hour. During June, Naranjo Company worked on four jobs. Data relating to these four jobs follow: Job 39 Job 40 Job 41 Job 42 Beginning balance $22,200 $35,200 $18,000 $0 Materials requisitioned 17,400 20,600 13,600 13,600 Direct labor cost 8,500 17,700 8,250 4,500 Overhead is assigned as a percentage of direct labor cost. During June, Jobs 39 and 40 were completed; Job 39 was sold at 115 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.
ob Costs Using a Plantwide Overhead Rate Naranjo Company designs industrial prototypes for outside companies. Budgeted overhead for the year was $240,000, and budgeted direct labor hours were 16,000. The average wage rate for direct labor is expected to be $30 per hour. During June, Naranjo Company worked on four jobs. Data relating to these four jobs follow: Job 39 Job 40 Job 41 Job 42 Beginning balance $22,200 $35,200 $18,000 $0 Materials requisitioned 17,400 20,600 13,600 13,600 Direct labor cost 8,500 17,700 8,250 4,500 Overhead is assigned as a percentage of direct labor cost. During June, Jobs 39 and 40 were completed; Job 39 was sold at 115 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Naranjo Company designs industrial prototypes for outside companies. Budgeted overhead for the year was $240,000, and budgeted direct labor hours were 16,000. The average wage rate for direct labor is expected to be $30 per hour. During June, Naranjo Company worked on four jobs. Data relating to these four jobs follow:
| Job 39 | Job 40 | Job 41 | Job 42 | |
| Beginning balance | $22,200 | $35,200 | $18,000 | $0 |
| Materials requisitioned | 17,400 | 20,600 | 13,600 | 13,600 |
| Direct labor cost | 8,500 | 17,700 | 8,250 | 4,500 |
Overhead is assigned as a percentage of direct labor cost. During June, Jobs 39 and 40 were completed; Job 39 was sold at 115 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.
Transcribed Image Text:Required:
1. Calculate the overhead rate based on direct labor cost.
% of direct labor cost
2. Set up a simple job-order cost sheet for all jobs in process during June.
Naranjo Company
Job-Order Cost Sheets
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 $24 instead of $30? What would the overhead
rate be? If required, round your overhead rate answer to one decimal place.
New budgeted direct labor cost = $
New overhead rate =
% of direct labor cost
How would the cost of the jobs be affected?
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