South Bay Manufacturing began business on January 1
During its first year of operation, South Bay worked on five industrial jobs and reported the following information at year-end:
Job 1 Job 2 Job 3 Job 4 Job 5
Direct Materials 1,000 8,500 4,000 3,500 1,500
Direct Labor 12,000 20,100 13,000 12,000 800
Allocated Mfg. Overhead 1,700 6,600 2,500 7,500 200
Job completed: Jun 30 Sep 1 Oct 15 Nov 1 Not completed
Job sold: Jul 10 Sep 12 Not sold Not sold N/A
Revenues: 39,000 39,000 N/A N/A N/A
South Bay's allocation of overhead costs left a debit balance of $1,400 in the Manufacturing Overhead account, which was adjusted to zero at year-end. What was the amount of gross profit earned during the year?
A) $26,700
B) $2,400
C) $28,100
D) $22,900
A .A)
Sales Revenue:
Job 1 $39,000
Job 2 39,000 $78,000
Less: Cost of Goods Sold:
Job 1 ($1,000 + $12,000 + $1,700 ) $14,700
Job 2 ($8,500 + $20,100 + $6,600 ) 35,200
Underallocated overhead costs 1,400 (51,300 )
Gross profit $26,700
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