Diamond Design Company makes custom chairs for individual customers. On September 1, there was one job in process, Job 243, with a cost of $2,000. Jobs 244, 245, and 246 were started during the month of September. Data on costs added during the month are as follows: Job 243 Job 244 Job 245 Job 246 Direct Materials $9,000 $2,280 $6,700 $8,000 Direct Labor 2,240 1,000 2,300 2,530 Overhead is applied to production at the rate of 60% of direct labor cost. Job 245 was completed on September 14 and the client was billed at cost plus 40%. All other jobs remained in process. If selling and administrative expenses for the month of September equals $ 1,000, what is operating income for the month of September

Question

Vincent Mosley

Business

10 April, 03:13

Diamond Design Company makes custom chairs for individual customers. On September 1, there was one job in process, Job 243, with a cost of $2,000. Jobs 244, 245, and 246 were started during the month of September. Data on costs added during the month are as follows: Job 243 Job 244 Job 245 Job 246 Direct Materials $9,000 $2,280 $6,700 $8,000 Direct Labor 2,240 1,000 2,300 2,530 Overhead is applied to production at the rate of 60% of direct labor cost. Job 245 was completed on September 14 and the client was billed at cost plus 40%. All other jobs remained in process. If selling and administrative expenses for the month of September equals $ 1,000, what is operating income for the month of September

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Answers (1)

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Jabari Herman · Answer 1

Net operating income = $3,152

Explanation:

Giving the following information:

Job 245 was completed on September 14 and the client was billed at cost plus 40%.

Job 245:

Direct Materials = $6,700

Direct Labor = $2,300

Overhead = 0.60*2300 = $1,380

Total cost = $10,380

Sales = 1.4*10380 = $14,532

Cost od goods sold = 10380

Gross profit = 4152

Selling and administrative expense = 1000

Net operating income = $3,152