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A company in the garment industry uses a Job Order Costing System and applies manufacturing overhead based on direct labour hours (DLH) using a predetermined
A company in the garment industry uses a Job Order Costing System and applies manufacturing overhead based on direct labour hours (DLH) using a predetermined overhead rate of $2.00 per DLH. Customer orders begin in the cutting room where fabric is cut from patterns and fusible reinforcement is completed. The garments are then constructed in the sewing department, sent for pressing and finally to the quality control department. Finished garments are then packed and shipped to the customer. (a) Purchased 20,000 metres of merino wool fabric at a total cost of $180,000. (b) Incurred costs for 3,000 direct labour hours of $46,175 and indirect labour costs of $34,700. (c) Paid $30,000 for property taxes and $89,000 for insurance related to the factory. (d) Purchased indirect materials at a total cost of $19,000. (e) Applied manufacturing overhead. Required: Prepare journal entries to record the above cost allocations and use the letter as the date
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