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question the company uses a job order costing system in which overhead isapplied to 4283115

Question

The company uses a job-order costing system in which overhead isapplied to jobs onthe basis of direct-labor cost. Its predeterminedoverhead rate is based on a cost formual that estimated $330,000 ofmanufacturing overhead for an estimated activity level of $200,000direct labor dollars. At the beginning of the year, the inventorybalances were as follows: Raw Material $25,000 Work in process10,000 Finished Goods 40,000 During the year, the followingtransactions were completed: a) Raw materials purchased for cash$275,000 b) Raw materials requisitioned for use in production,$280,000 (materials costing $220,000 were charged directly to jobs;the remaining materials were indirect). c) Costs for employeeservices were incurred as follows: Direct Labor $180,000 IndirectLabor 72,000 Sales commissions 63,000 Administrative salaries90,000 d) Rent for the year was $18,000 ($13,000 of this amountrelated to factory operations, and the remainder related to sellingand administrative activities). e) Utililty costs incurred, $57,000f) Advertising costs incurred, $140,000 g) Depreciation recorded onequipment $100,000 ($88,000 of this amount was on equipment used infactory operations; the remaining $12,000 was on equipment used inselling and administrative activities; the building has been fullydepreciated). h) Manufacturing overhead cost was applied to jobs,$_____?_____ i) Goods that had cost $675,000 to manufactureaccording to their job cost sheets were completed. j) The companysold 50,000 basketballs for the year. k) The total cost tomanufacture these goods according to their job cost sheets was$700,000. These costs are all variable. Requirements 1. Preparejournal entries to record the transactions for the year. 2. PrepareT-accounts for inventories, Manufacturing Overhead and Cost ofGoods Sold. (Don't forget beginning balances) 3. Is ManufacturingOverhead under or overapplied for the year? Prepare a journal entryto close any balance to Cost of Goods Sold. 4. Prepare an incomestatement for the year.

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