Question

Ruby Company is a job-order firm that follows a normal costing approach.

Job 26 Job 27 Job 28
Beginning balance$ 500$ 0$ 0
Materialsrequisitioned$5,000$4,800$4,500
Direct labor cost$2,400$2,250$1,900Applied overhead$1,800$1,560$1,320Total cost$9,700$8,610$7,720
During January, Job 26 and Job 27 were completed, and Job 26 was sold at 125 percent of cost. Job 28 remains unfinished at the end of the month. Assuming the beginning balance of Finished Goods is $2,000 (consisting of Job 61), calculate the ending balance of Finished Goods for January.

Answer 1

The ending balance of Finished Goods for January is $10,610, calculated by adding the cost of completed jobs to the beginning balance and subtracting the cost of the job sold.

Step-by-step explanation:

To calculate the ending balance of Finished Goods for January, we will follow these steps:

1. Start with the beginning balance of Finished Goods.
2. Add the total cost of the jobs completed during January.
3. Subtract the cost of the goods sold during January.

The beginning balance of Finished Goods is $2,000 (Job 61). Job 26 and Job 27 were completed during the month, so we add their total costs to the beginning balance. Job 26 cost $9,700 and Job 27 cost $8,610, leading to a total of $18,310 for both jobs.

Job 26 was sold at 125 percent of its cost:

Selling Price of Job 26 = Cost of Job 26 × 125% = $9,700 × 1.25 = $12,125

To find the ending balance, we subtract the cost of goods sold (Job 26 only, since Job 27 was not sold) from the total:

Ending Balance = Beginning Balance + Cost of Completed Jobs - Cost of Goods Sold

Ending Balance = $2,000 (Job 61) + $18,310 (Jobs 26 + 27) - $9,700 (Job 26) = $10,610

Therefore, the ending balance of Finished Goods for January is $10,610.