Question

El Torro Company produces industrial gauging equipment that it sells to other companies. Budgeted overhead for the year was $260,000, and budgeted direct labor hours were 20,000. The average wage rate for direct labor is expected to be $25 per hour. During January, El Torro Company worked on four jobs. Data relating to these four jobs follow:

Job A Job B Job C Job D
Beginning balance $23,700 $34,600 $17,000 $ 0
Materials requisitioned $18,900 $21,400 $8,350 $12,000
Direct labor cost $10,000 $18,500 $3,000 $2,900
Applied overhead $6,500 $9,975 $2,250 $1,750
Total cost $59,100 $84,475 $30,600 $16,650

During January, Jobs A, B, and C were completed, and Job A was sold at 125% of cost. Job D remains unfinished at the end of the month. Assuming the beginning balance of Finished Goods is $15,000, calculate the ending balance of Finished Goods for January.

Answer 1

To calculate the ending balance of Finished Goods for January, determine the total cost of the completed jobs and the remaining balance of Job D.

Step-by-step explanation:

To calculate the ending balance of Finished Goods for January, we need to determine the total cost of the completed jobs and the remaining balance of Job D. The total cost of the completed jobs is the sum of the materials requisitioned, direct labor cost, and applied overhead for Jobs A, B, and C. The remaining balance of Job D is the sum of the materials requisitioned, direct labor cost, and applied overhead for Job D. Adding these two amounts together will give us the cost of goods manufactured for January. Finally, we subtract the cost of goods sold (125% of the cost of Job A) and add the beginning balance of Finished Goods to calculate the ending balance of Finished Goods.