Job Order Costing Salem Manufacturing Company applies manufacturing overhead costs on the basis of direct materials costs. The year 2009 estimates are:

For every dollar of direct materials costs, 60 cents of overhead is applied ($180,000 ÷
$300,000 = $0.60).
Following are the Salem Manufacturing Company transactions for 2009 (entries rounded to the nearest dollar):

a. Purchased materials for cash, $500,000.

b. Issued $400,000 of materials to production (80% direct, 20% indirect).

c. Incurred direct labor costs of $250,000.

d. Incurred indirect labor costs of $70,000.

e. Incurred costs for administrative and sales salaries of $70,000 and $60,000, respectively.

f. Incurred manufacturing overhead costs: property taxes on manufacturing plant, $6,000;
plant utilities, $14,000; insurance on plant and equipment, $3,000. (Assume these expenses have not yet been paid.)
g. Recorded depreciation on manufacturing plant and equipment of $18,000 and $6,000, respectively.
h. Applied manufacturing overhead to Work-in-Process Inventory.
i. Transferred 65% of Work-in-Process Inventory to Finished Goods Inventory. Beginning Work-in-Process Inventory was $13,000.
j. Sold 90% of finished goods on account at a markup of 60% of cost. There was no beginning inventory of finished goods.
k. Closed the balance in Manufacturing Overhead to Cost of Goods Sold.

Required:
Prepare a journal entry for each transaction.

Transcribed Image Text:

Direct materials costs Manufacturing overhead $300,000 180,000