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:
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 equaled $ 1,000, what is operating income for the month of September?
A) $14,00
B) $3,152
C) $5,345
D) $2,000

Question

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:  
 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 equaled $ 1,000, what is operating income for the month of September?
A) $14,00 
B) $3,152 
C) $5,345 
D) $2,000

Quizplus · Accepted Answer

Only Job 245 was completed and sold during the month.
 
*Overhead = 60% of direct labor cost = 60% × $2,300 = $1,380
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Diamond Design Company Makes Custom Chairs for Individual Customers