Naranjo Company designs industrial prototypes for outside companies. Budgeted overhead for the year was $490,000, and budgeted direct labor hours were 28,000. The average wage rate for direct labor is expected to be $35 per hour. During June, Naranjo Company worked on four jobs. Data relating to these four jobs follow:

	Job 39	Job 40	Job 41	Job 42
Beginning balance	$24,100	$34,200	$19,800	$700
Materials requisitioned	16,100	22,600	8,200	13,900
Direct labor cost	7,200	19,700	2,850	4,800

Overhead is assigned as a percentage of direct labor cost. During June, Jobs 39 and 40 were completed; Job 39 was sold at 120 percent of cost. (Naranjo had originally developed Job 40 to order for a customer; however, that customer was near bankruptcy and the chance of Naranjo being paid was growing dimmer. Naranjo decided to hold Job 40 in inventory while the customer worked out its financial difficulties. Job 40 is the only job in Finished Goods Inventory.) Jobs 41 and 42 remain unfinished at the end of the month.

Required:

1. Calculate the overhead rate based on direct labor cost.

fill in the blank 3539d701cfc806e_1 % of direct labor cost

2. Set up a simple job-order cost sheet for all jobs in process during June.

Naranjo Company
Job-Order Cost Sheets
	Job 39	Job 40	Job 41	Job 42
Balance, June 1	$fill in the blank c0807702efe6f89_1	$fill in the blank c0807702efe6f89_2	$fill in the blank c0807702efe6f89_3	$fill in the blank c0807702efe6f89_4
	fill in the blank c0807702efe6f89_6	fill in the blank c0807702efe6f89_7	fill in the blank c0807702efe6f89_8	fill in the blank c0807702efe6f89_9
	fill in the blank c0807702efe6f89_11	fill in the blank c0807702efe6f89_12	fill in the blank c0807702efe6f89_13	fill in the blank c0807702efe6f89_14
	fill in the blank c0807702efe6f89_16	fill in the blank c0807702efe6f89_17	fill in the blank c0807702efe6f89_18	fill in the blank c0807702efe6f89_19
Total	$fill in the blank c0807702efe6f89_20	$fill in the blank c0807702efe6f89_21	$fill in the blank c0807702efe6f89_22	$fill in the blank c0807702efe6f89_23

3. What if the expected direct labor rate at the beginning of the year was $28 instead of $35? What would the overhead rate be? If required, round your overhead rate answer to one decimal place.

New budgeted direct labor cost = $fill in the blank 538aadfdb06f047_1

New overhead rate = fill in the blank 538aadfdb06f047_2% of direct labor cost

How would the cost of the jobs be affected?