Bob's Powerwasher Company makes custom powerwashers for individual customers. On April 1, one job was in process, Job 900, which had a cost of $45,650. Jobs 901, 902, and 903 were started during the month of July. Data on costs added during the month are as follows:
Overhead is applied to production at the rate of 85% of direct labour cost. Job 903 was completed on April 26, and the client was billed at cost plus 45%. All other jobs remained in process.
$\begin{array}{lllll}&\text { Job } 900&\text { Job } 901&\text { Job } 902&\text { Job } 903\
\text { Direct Materials } & \$ 12,500 & \$ 6,740 & \$ 2,520 & \$ 7,870 \
\text { Direct Labour } & \$ 5,880 & \$ 10,280 & \$ 3,760 & \$ 11,360
\end{array}$
-Refer to the Figure.Suppose selling and administrative expenses for the month of July equal $6,000.What is operating income for the month of July?

Question

Bob's Powerwasher Company makes custom powerwashers for individual customers. On April 1, one job was in process, Job 900, which had a cost of $45,650. Jobs 901, 902, and 903 were started during the month of July. Data on costs added during the month are as follows:
Overhead is applied to production at the rate of 85% of direct labour cost. Job 903 was completed on April 26, and the client was billed at cost plus 45%. All other jobs remained in process.
 $\begin{array}{lllll}&\text { Job } 900&\text { Job } 901&\text { Job } 902&\text { Job } 903\
\text { Direct Materials } & \$ 12,500 & \$ 6,740 & \$ 2,520 & \$ 7,870 \
\text { Direct Labour } & \$ 5,880 & \$ 10,280 & \$ 3,760 & \$ 11,360
\end{array}$
-Refer to the Figure.Suppose selling and administrative expenses for the month of July equal $6,000.What is operating income for the month of July?

Quizplus · Accepted Answer

Operating income is calculated as sales revenue minus cost of goods sold and selling and administrative expenses. In this case, we do not have sales revenue, so we cannot calculate operating income.

Bob's Powerwasher Company Makes Custom Powerwashers for Individual Customers -Refer to the Figure