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.
$130,075
$31,650
$189,175
$99,475

Answer 1

give me some more time in about 5 mins ur answer will be readyyyyy

Answer 2

The ending balance of finished goods for El Torro Company for January is calculated as $115,300. This is obtained by adding the completed jobs' costs to the beginning balance and subtracting the selling price of the job sold.

Step-by-step explanation:

The task is to calculate the ending balance of finished goods for El Torro Company for the month of January. Starting with the beginning balance of finished goods, we add the total costs of the jobs completed during the month (Jobs A, B, C), and then we subtract the costs of the job sold (Job A).

The given beginning balance of finished goods is $15,000. The total costs for Jobs A, B, and C are $59,100, $84,475, and $30,600 respectively. These three jobs were finished, so their total cost of $174,175 is added to the beginning balance to get $189,175. However, since Job A has been sold, we subtract the selling price of Job A from the running total. Job A's cost was $59,100, and it was sold at 125% of its cost, which is $73,875 (calculated as 1.25 times $59,100). Subtracting this from the running total gives the final ending balance in finished goods for January, which is $115,300 ($189,175 - $73,875).

Thus, the correct answer for the ending balance of finished goods is $115,300, which is not listed in the provided choices. The process entails calculating the cost of goods manufactured, adding the beginning balance, and then subtracting the cost of goods sold to arrive at the ending balance.