Exercise $12-5$A $($Algo$)$ Job$-$order costing in a manufacturing company LO $12-2$

Fanning Corporation builds sailboats. On January $1,$ Year $3,$ the company had the following account balances: $$65,000$ for both cash and common stock. Boat $25$ was started on February $10$ and finished on May $31.$ To build the boat, Fanning had incurred cash costs of $$6,700$ for labor and $$4,650$ for materials. During the same period, Fanning paid $$12,010$ cash for actual manufacturing overhead costs. The company expects to incur $$216,000$ of indirect overhead cost during Year $3.$ The overhead is allocated to jobs based on direct labor cost. The expected total labor cost for the year is $$120,000.$

Fanning uses a just$-$in$-$time inventory management system. Consequently, it does not have raw materials inventory. Raw materials purchases are recorded directly in the Work in Process Inventory account.

Required

a$.$ Use the horizontal financial statements model to record Fanning's business events. The first row shows beginning balances.

b$.$ If Fanning desires to earn a profit equal to $20$ percent of cost$,$ for what price should it sell the boat?

c$.$ If the boat is not sold by year$-$end, what amount would appear in the Work in Process Inventory and Finished Goods Inventory on the balance sheet for Boat $25?$

d$.$ Is the amount of inventory you calculated in Requirement $c$ the actual or the estimated cost of the boat?

Complete this question by entering your answers in the tabs below.

Required B

Required C

Use the horizontal financial statements model to record Fanning's business events. The first row shows bec Note: Do not round intermediate calculations. Enter any decreases to account balances with a minus sign.

Balance Sheet