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1. Babb Company is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the
1. Babb Company is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year: Beginning Ending Balance Balance 19,000 Raw Materials Work in Process Finished Goods 15,000 21,000 28,000 108,000 102,000 The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 40,000 machine-hours and incur $330,000 in manufacturing overhead cost. The following transactions were recorded for the year: 1. Raw materials were purchased on account, $375,000. 2. Raw materials were requisitioned for use in production, $379,000 $(337,000 direct and $42,000 indirect). 3. The following employee costs were incurred on account: direct labor, $264,000; indirect labor, $115,000; and administrative salaries, $157,000 4. Sales commissions costs were paid in cash, $91,000. 5. Factory utility costs were paid in cash, $56,000 6. Depreciation for the year was $139,000 of which $114,000 is related to factory operations and $25,000 is related to selling, general, and administrative activities. 7. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 32,500 machine-hours. 8. The cost of goods manufactured was recorded. (You will need to compute this amount.) 9. Manufacturing overhead was closed to Cost of Goods Sold. On the next page, prepare the journal entries for the above transactions. Pleas omit journal entry descriptions
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