Income Statement Predetermined Overhead Rate, Application of Overhead to Jobs, Job Cost, Unit Cost On August 1, Cairle...

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Accounting

Income Statement
Predetermined Overhead Rate, Application of Overhead to Jobs,Job Cost, Unit Cost
On August 1, Cairle Company’s work-in-process inventoryconsisted of three jobs with the following costs:
Job 70 Job 71 Job 72
Direct materials $1,500 $2,000 $850
Direct labor 1,900 1,300 900
Applied overhead 1,520 1,040 720
During August, four more jobs were started. Information on costsadded to the seven jobs during the month is as follows:
Job 70 Job 71 Job 72 Job 73 Job 74 Job 75 Job 76
Direct materials $800 $1,235 $3,600 $5,000 $300 $560 $80
Direct labor 1,000 1,400 2,200 1,800 600 850 180
Before the end of August, Jobs 70, 72, 73, and 75 werecompleted. On August 31, Jobs 72 and 75 were sold.
Cairle’s selling and administrative expenses for August were$1,300. Assume that Cairle prices its jobs at cost plus 25percent.
Required:
Prepare an income statement for Cairle Company for August.
Cairle Company
Income Statement
For the Month of August
Sales $
Cost of goods sold
Gross margin $
Selling and administrative expenses
Operating income $
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4.2 Ratings (800 Votes)

Direct material and direct labour cost for each job has been given However applied overhead have not been given When you calculate the overhead are applied at 80 of direct labour For Job 70 80 of 1900 1520 and so on for other jobs as well Total overhead cost See Answer

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	Job 70	Job 71	Job 72
Direct materials	$1,500	$2,000	$850
Direct labor	1,900	1,300	900
Applied overhead	1,520	1,040	720

Cairle Company
Income Statement
For the Month of August
Sales	$
Cost of goods sold
Gross margin	$
Selling and administrative expenses
Operating income	$