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WoodGrain Technology makes home office furniture from fine hardwoods. The company operates two departments, the preparation department and the fabrication department. Overhead costs are applied to jobs from each department, using machine hours as the activity level for the preparation department and direct labor hours as the activity level for the fabrication department. At the beginning of 2008, the company's management made the following estimates: Preparation Department Fabrication Department

Overhead cost $432,000 $702,000
Machine hours 90,000 25,000
Direct labor hours 35,000 65,000


In April, WoodGrain began working on Job #127. Job #127, which was completed in May, consisted of 100 units. The company's cost records show the following information concerning Job #127: Preparation Department Fabrication Department

Direct material cost $940 $1,200
Direct labor cost $710 $980
Machine hours 350 80
Direct labor hours 70 150


During June, WoodGrain sold 60 units from Job #127 to a customer. It is the policy of WoodGrain to charge customers a price of 150% of total manufacturing costs for all jobs. find out the amount of gross profit earned by WoodGrain from the sale of the 60 units. Do not
use decimals in your answer.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M940961

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