Q. 17-22E-d - Horngren'S Financial And Managerial Accounting

Question

June production generated the following activity in Bentley Chassis Company’s Work-in-Process Inventory account:

June 1 balance	\(36,000
Direct materials used	32,000
Direct labor assigned to jobs	40,000
Manufacturing overhead allocated to jobs	28,000

Additionally, Bentley Chassis has completed Jobs 142 and 143, with total costs of

\)37,000 and $48,000, respectively.

Requirements

4. What is the gross profit on Job 143?

Step-by-Step Solution

Answer

The gross profit earned on Job 143 is $15,000

Gross profit

Gross profit means the income of the company after paying all the direct expenses related to the manufacturing of the goods. It is a financial term used for determining the profitability of the company.

Calculation of gross profit

$$\begin{gathered} \mathbf{Gross}\mathbf{ }\mathbf{profit}\mathbf{ }\mathbf{=}\mathbf{ }\mathbf{Sales}\mathbf{ }\mathbf{revenue}\mathbf{ }\mathbf{-}\mathbf{ }\mathbf{total}\mathbf{ }\mathbf{cost} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{ }\mathbf{\$}\mathbf{63}\mathbf{,}\mathbf{000}\mathbf{-}\mathbf{\$}\mathbf{48}\mathbf{,}\mathbf{000} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{\$}\mathbf{15}\mathbf{,}\mathbf{000} \end{gathered}$$