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Job Order Costing
Job Order Costing
of direct labour cost. At the beginning of the most recent year, the following estimates were made as a basis for computing the predetermined overhead rate for the year: manufacturing overhead cost, $340,000; direct labour cost, $170,000. The following transactions took place during the year: (Note: all purchases and services were acquired on account): a.) Raw materials were purchased on account $150,000 b.) Raw materials requisitioned for use in production: Direct materials: $108,000 Indirect materials: $32,000 c.) Advertising costs were incurred, $35,000. d.) Salaries and wages incurred as follows: Direct labour $150,000 Indirect labour $ 90,000 Selling and administrative salaries $125,000 e.) Maintenance costs incurred in the factory, $45,000. f.) Insurance expired during the year, $25,000 (60% relates to the factory, the remainder is on selling and administrative items). g.) Depreciation recorded for the year, $90,000 (70% relates to factory assets and the remainder relates to selling and administrative assets). h.) Rental cost incurred on buildings, $120,000, (80% of the space is occupied by the factory, the remainder is occupied by offices). i.) Manufacturing overhead cost was applied to jobs ___?___. j.) Goods costing $450,000 were completed and moved to the warehouse. k.) Sales for the year were $750,000. The total cost of the manufacturing these items was $400,000. Required: 1.) Record journal entries for each of the items above. 2.) Is manufacturing overhead overapplied or underapplied? By how much? 3.) Record a journal entry to close manufacturing overhead to cost of goods sold. 4.) Prepare an income statement for the year.