Wright's Construction builds custom houses for individual buyers. On June 1, it had one job started with a beginning Work-in-Process of $56,000. During June the job was finished and sold. Direct labor for the job in June was $75,000 and direct materials used were $57,000. Overhead is computed at a rate of 65% of direct labor. There is a markup of 35% on all sales. What was the selling price of the house?

Question

Quizplus · Accepted Answer

1. Calculate total manufacturing cost:
Direct Materials + Direct Labor + Manufacturing Overhead
= $57,000 + $75,000 + ($75,000 x 0.65) = $186,250

2. Add markup of 35%:
Total Manufacturing Cost x (1 + Markup Percentage)
= $186,250 x (1 + 0.35) = $251,687.50

3. Determine selling price:
Selling Price = Total Manufacturing Cost + Profit
= $251,687.50 + $56,000 = $307,687.50

Therefore, the selling price of the house is $319,612.50 (after rounding to nearest cent). Option A is the correct answer.

Wright's Construction Builds Custom Houses for Individual Buyers