# Question & Answer: Deluxe Design Company makes custom furniture. On December 1, there were two jobs in process, Job 683, with a cost of \$14, 200 and Job…..

Deluxe Design Company makes custom furniture. On December 1, there were two jobs in process, Job 683, with a cost of \$14, 200 and Job 684 with a cost of \$23, 500. Jobs 685, 686, and 687 were started during the month of December. Data on costs added during the month are as follows: The predetermined overhead rate for Deluxe Design Company is based on estimated direct labor costs of \$100,000 and estimated factory overhead of \$80,000. Job 685 was completed on December 17. Job 684 was completed on December 21 and the client was billed at cost plus 45%. All other jobs remained in process. A.) Determine the amount of overhead to apply to each job for the period. B.) Calculate the cost of work-in-process at the end of the month. C.) Calculate the cost of finished goods, assuming that finished goods inventory on December 1st was zero. D.) The actual overhead for December was \$41, 100, calculate the overhead variance. E.) Calculate the sales price for Job #684. F.) Calculate the adjusted cost of goods sold for the month of December. G.) If selling and administrative expenses for the month totaled \$5, 600, what is the company’s operating income for December?

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Question & Answer: Deluxe Design Company makes custom furniture. On December 1, there were two jobs in process, Job 683, with a cost of \$14, 200 and Job…..
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 WORKSHEET: Job 683 Job 684 Job 685 Job 686 Job 687 Beginning balance 14200 23500 Costs added during the month: Direct materials 11000 8000 31400 16700 6000 Direct labor 21000 6000 12300 8450 2500 Overhead applied at 80% of Direct labor cost 16800 4800 9840 6760 2000 40200 Total cost 63000 42300 53540 31910 10500 Pre-determined overhead rate = Estimated factory overhead/Estimated direct labor costs = 80000/100000 = 80% of direct labor cost. A) Amount overhead applied to each job for the period: Job 683 Job 684 Job 685 Job 686 Job 687 Direct labor 21000 6000 12300 8450 2500 Overhead applied at 80% of Direct labor cost 16800 4800 9840 6760 2000 B) Cost of WIP at the end of the month: Job 683 Job 686 Job 687 Beginning balance 14200 Costs added during the month: Direct materials 11000 16700 6000 Direct labor 21000 8450 2500 Overhead applied at 80% of Direct labor cost 16800 6760 2000 Total cost 63000 31910 10500 C) Cost of finished goods inventory: Job 685 Beginning balance Costs added during the month: Direct materials 31400 Direct labor 12300 Overhead applied at 80% of Direct labor cost 9840 38900 Total cost 53540 D) Overhead variance = Actual overhead – Overhead assigned = 41100 – 40200 = \$900 Unfavorable E) Sales price for Job #684: Cost of production of the job 42300 Add: Mark up of 45% 19035 Price of the Job 61335 F) Adjusted cost of goods sold: Cost of goods sold (Job # 684) before adjustment 42300 Add: Underabsorbed overhead 900 Adjusted cost of goods sold 43200 G) Sales revenue 61335 Less: Adjusted cost of goods sold 43200 Gross profit 18135 Less: Selling and administrative expenses 5600 Operating income 12535