CALCULATING ENDING WORK IN PROCESS, INCOME STATEMENT Uehler Prosthetics Company produces artificial limbs for individuals. Each prosthetic is unique. On January 1, three jobs, identified by the name of the person being fitted with the prosthetic, were in process with the following costs:

Asher Styne Wollner Direct materials $100 $ 340 $ 780 Direct labor 350 700 1,050 Applied overhead 280 560 840 Total $730 $1,600 $2,670 During the month of January, two more jobs were started, Johns and Burton. Materials and labor costs incurred by each job in January are as follows:

Materials Direct Labor Asher $ 600 $ 300 Styne 550 200 Wollner 860 250 Johns 1,310 1,650 Burton 260 180 Wollner and Johns’ prosthetics were completed and sold by January 31.

Required:

. If overhead is applied on the basis of direct labor dollars, what is the overhead rate?

. Prepare simple job-order cost sheets for each of the five jobs in process during January.

. What is the ending balance of Work in Process on January 31? What is the Cost of Goods Sold in January?

. Suppose that Uehler Prosthetics Company prices its jobs at cost plus 20 percent. In addition, during January, marketing and administrative costs of $850 were incurred.

Prepare an income statement for the month of January.

Problem