Figure 5-6. Stutz,Inc.designs and builds basketball gymnasiums.Each gymnasium is custom-built to individual customers' specifications.Stutz uses job-order costing to keep track of its costs.In February it worked on three jobs.Data for these jobs are as follows:
Overhead is applied to jobs at the rate of $25 per machine hour.By February 28,Job 178 is the only one unfinished.The balance of Finished Goods on February 1 is $94,000 (consisting of Job 177).Jobs 177 and 179 are sold during February.Stutz sells its product at cost plus 40%.
Refer to Figure 5-6.What is sales revenue for February?

Question

Figure 5-6. Stutz,Inc.designs and builds basketball gymnasiums.Each gymnasium is custom-built to individual customers' specifications.Stutz uses job-order costing to keep track of its costs.In February it worked on three jobs.Data for these jobs are as follows:
 Overhead is applied to jobs at the rate of $25 per machine hour.By February 28,Job 178 is the only one unfinished.The balance of Finished Goods on February 1 is $94,000 (consisting of Job 177).Jobs 177 and 179 are sold during February.Stutz sells its product at cost plus 40%.
Refer to Figure 5-6.What is sales revenue for February?

Quizplus · Accepted Answer

To calculate the sales revenue for February, we need to determine the cost of goods sold (COGS) for the two jobs that were sold (177 and 179) and add the markup of 40%.

COGS for Job 177: 
Direct materials = $52,000 
Direct labor = $27,000 
Manufacturing overhead = $23,100 ($1,200 + $1,500 + $20,400) 
Total manufacturing costs = $102,100 
Markup = 40% x $102,100 = $40,840 
Selling price = $142,940

COGS for Job 179: 
Direct materials = $20,000 
Direct labor = $16,000 
Manufacturing overhead = $14,400 ($800 + $1,000 + $12,600) 
Total manufacturing costs = $50,400 
Markup = 40% x $50,400 = $20,160 
Selling price = $70,560

Total sales revenue for February: 
$142,940 (Job 177) + $70,560 (Job 179) = $213,500 
Note that the unfinished Job 178 and the beginning balance of Finished Goods are not relevant to this calculation.