Needham Company Uses a Job-Order Costing System The Company Applies Overhead at 120% of Direct Labor Cost

question 7

Multiple Choice

Needham Company uses a job-order costing system.During the month of September,the company worked on three jobs.The job-order cost sheets for the three jobs contained the following information at the end of September: $$\begin{array} { l r r r } & \text { Job A } & \text { Job B } & \text { Job C } \\\text { Beginning Balances } & \$ 4,000 &\$ 3 , 0 0 0 &\$ 6 , 0 0 0 \\\text { Direct Materials } & 1,000 & 1,600 & 2,000 \\\text { Direct Labor } & 2,400 & 4,600 & 1,800\end{array}$$
The company applies overhead at 120% of direct labor cost.
If Job B was sold for $16,000,what was the amount of gross margin for this job? (Ignore any consideration of underapplied or overapplied overhead.)

• A) $6,800
• B) $5,880
• C) $1,280
• D) $14,720

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Definitions:

Investing Activities

Transactions and events related to the acquisition and disposal of long-term assets and other investments, reflected in a company's cash flow statement.

Purchase And Sale

Purchase and sale refer to the process of acquiring goods or services (purchase) and then offering them for consumption or usage by others (sale), serving as the fundamental activity of any commercial business.

Financing Activities

Transactions and events where a company either raises funds through borrowing or repaying debt, or issuing and repurchasing its own shares, as seen in the cash flow statement.

Retained Earnings

The amount of net income retained in the corporation.