34. Calculating the Cost of Jobs, Making Journal Entries, and Preparing an Income Statement. Fit Right, Inc., produces custom trailers for professional racers. Each trailer is built to customer specifications. During July, its first month of operations, Fit Right began production of four customer orders-jobs 1 through 4. The following transactions occurred during July. 1. Purchased trailer parts totaling $14,400 2. Processed material requisitions for the following items: 3. Processed timesheets showing the following: 4. Applied overhead using a predetermined rate of $30 per direct labor hour 5. Completed and transferred to finished goods jobs 1, 2, and 3 6. Delivered jobs 1 and 2 to customers, billing them $6,000 for job 1 and $3,500 for job 2 (Hint: Two entries are required-one for the cost of the goods and another for the revenue.) Required: a. Calculate the production costs incurred in July for each of the four jobs. b. Make the appropriate journal entry for each transaction described previously (1 through 6). Assume all payments will be made next month. (Hint: Use Figure 2.7 as a guide.) c. How much gross profit did Fit Right, Inc., earn from the sale of job 2? d. Assume selling costs totaled $1,000 and that general and administrative costs totaled $2,200. Prepare an income statement for Fit Right for the month of July. (Assume there is no adjustment to cost of goods sold for underapplied or overapplied overhead.) 34. Calculating the Cost of Jobs, Making Journal Entries, and Preparing an Income Statement. Fit Right, Inc., produces custom trailers for professional racers. Each trailer is built to customer specifications. During July, its first month of operations, Fit Right began production of four customer orders-jobs 1 through 4. The following transactions occurred during July. 1. Purchased trailer parts totaling $14,400 2. Processed material requisitions for the following items: 3. Processed timesheets showing the following: 4. Applied overhead using a predetermined rate of $30 per direct labor hour 5. Completed and transferred to finished goods jobs 1, 2, and 3 6. Delivered jobs 1 and 2 to customers, billing them $6,000 for job 1 and $3,500 for job 2 (Hint: Two entries are required-one for the cost of the goods and another for the revenue.) Required: a. Calculate the production costs incurred in July for each of the four jobs. b. Make the appropriate journal entry for each transaction described previously (1 through 6). Assume all payments will be made next month. (Hint: Use Figure 2.7 as a guide.) c. How much gross profit did Fit Right, Inc., earn from the sale of job 2? d. Assume selling costs totaled $1,000 and that general and administrative costs totaled $2,200. Prepare an income statement for Fit Right for the month of July. (Assume there is no adjustment to cost of goods sold for underapplied or overapplied overhead.)
