Income Statement
Predetermined Overhead Rate, Application of Overhead to Jobs,Job Cost, Unit Cost
On August 1, Cairle Company’s work-in-process inventoryconsisted of three jobs with the following costs:
| Job 70 | Job 71 | Job 72 |
| Direct materials | $1,500 | $2,000 | $850 |
| Direct labor | 1,900 | 1,300 | 900 |
| Applied overhead | 1,520 | 1,040 | 720 |
During August, four more jobs were started. Information on costsadded to the seven jobs during the month is as follows:
| Job 70 | Job 71 | Job 72 | Job 73 | Job 74 | Job 75 | Job 76 |
| Direct materials | $800 | $1,235 | $3,600 | $5,000 | $300 | $560 | $80 |
| Direct labor | 1,000 | 1,400 | 2,200 | 1,800 | 600 | 850 | 180 |
Before the end of August, Jobs 70, 72, 73, and 75 werecompleted. On August 31, Jobs 72 and 75 were sold.
Cairle’s selling and administrative expenses for August were$1,300. Assume that Cairle prices its jobs at cost plus 25percent.
Required:
Prepare an income statement for Cairle Company for August.
| Cairle Company |
| Income Statement |
| For the Month of August |
| Sales | $ |
| Cost of goods sold | |
| Gross margin | $ |
| Selling and administrative expenses | |
| Operating income | $ |
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