Job costing, journal entries.

The University of Chicago Press is wholly owned by the

university. It performs the bulk of its work for other university departments, which pay as though
the press were an outside business enterprise. The press also publishes and maintains a stock of
books for general sale. The press uses normal costing to cost each job. Its job-costing system has
two direct-cost categories (direct materials and direct manufacturing labor) and one indirect-cost
pool (manufacturing overhead, allocated on the basis of direct manufacturing labor costs). The
following data (in thousands) pertain to 2014:

1. Prepare an overview diagram of the job-costing system at the University of Chicago

Press. 2. Prepare journal entries to summarize the 2014 transactions. As your final entry, dispose
of the yearend under- or overall located manufacturing overhead as a writeoff to Cost of Goods
Sold. Number your entries. Explanations for each entry may be omitted. 3. Show posted T-
accounts for all inventories, Cost of Goods Sold, Manufacturing Overhead Control, and
Manufacturing Overhead Allocated. 4. How did the University of Chicago Press perform in
2014?

:: Solution ::
step: 1 of 8
1.

Prepare an overview diagram of job costing system at the University of Chicago

Press:

Prepare a diagram of job costing system of University of Chicago.

In the above diagram shows job costing system of University of Chicago, manufacturing
overhead comes under indirect cost pool, direct manufacturing labor costs comes under
cost allocation base, indirect and direct costs comes under cost object and direct materials
and direct manufacturing labor comes under direct cost.

step: 2 of 8
2.

Record Journal entries to summarize the 2014 transactions:

Journal entries: A journal is a record of transactions in form of journal entry in

chronological order. A journal entry records debit and credit of every transaction to record
all transaction based on double-entry system of accounting.
3.

Prepare T Accounts for all inventories, Cost of goods sold, Manufacturing overhead
control, and manufacturing overhead allocated:

step: 3 of 8
step: 4 of 8

step: 5 of 8

step: 6 of 8

step: 7 of 8

step: 8 of 8
4.
The University of Chicago Press performed in 2014 well.

Where profit is calculated by subtracting the cost of goods sold from revenue.

The University of Chicago performed well in 2014. The Press also actively pursues
collaborations with University faculty, through journals and book publication.