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Southworth Company uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of the cost of direct materials used in production. Its predetermined overhead rate was based on a cost formula that estimated $222,600 of manufacturing overhead for an estimated allocation base of $159,000 direct material dollars.
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The following transactions took place during the year (all purchases and services were acquired on account):
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| a. |
Raw materials purchased, $151,000. |
| b. |
Raw materials requisitioned for use in production (all direct materials), $142,000. |
| c. |
Utility bills incurred in the factory, $22,000. |
| d. |
Costs for salaries and wages were incurred as follows: |
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|
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| Direct labor |
$ |
224,000 |
| Indirect labor |
$ |
61,800 |
| Selling and administrative salaries |
$ |
144,000 |
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| e. |
Maintenance costs incurred in the factory, $25,000. |
| f. |
Advertising costs incurred, $120,000. |
| g. |
Depreciation recorded for the year, $48,000 (70% relates to factory assets, and the remainder relates to selling and administrative assets).
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| h. |
Rental cost incurred on buildings, $87,000 (70% of the space is occupied by the factory, and 30% is occupied by sales and administration).
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| i. |
Miscellaneous selling and administrative costs incurred, $12,000. |
| j. |
Manufacturing overhead cost was applied to jobs, $ ? |
| k. |
Cost of goods manufactured for the year, $558,000.
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| l. |
Sales for the year (all on account) totaled $1,300,000. These goods cost $530,000 according to their job cost sheets.
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The balances in the inventory accounts at the beginning of the year were as follows:
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| Raw materials |
$ |
25,000 |
| Work in process |
$ |
21,000 |
| Finished Goods |
$ |
34,000
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