Ch4 3

EXAMPLE 6 Job costing, journal entries. Donald Transport assembles prestige manufactured homes. Its job-costing system has two direct-cost categories (direct materials and direct manufacturing labor) and one indirect-cost pool (manufacturing overhead allocated at a budgeted $31 per machine-hour in 2017). The following data (in millions) show operation costs for 2017: Materials Control, beginning balance, January 1, 2017 $ 18 Work-in-Process Control, beginning balance, January 1, 2017 9 Finished Goods Control, beginning balance, January 1, 2017 10 Materials and supplies purchased on credit 154 Direct materials used 152 Indirect materials (supplies) issued to various production departments 19 Direct manufacturing labor 96 Indirect manufacturing labor incurred by various production departments 34 Depreciation on plant and manufacturing equipment 28 Miscellaneous manufacturing overhead incurred (ordinarily would be detailed as 13 repairs, utilities, etc., with a corresponding credit to various liability accounts) Manufacturing overhead allocated, 3,000,000 actual machine-hours ? Cost of goods manufactured 298 Revenues 410 Cost of goods sold 294 Required: 1. Prepare an overview diagram of Donald Transport's job-costing system. 2. Prepare journal entries. Number your entries. Explanations for each entry may be omitted. Post to T-accounts. 3. Show the journal entry for disposing of under- or overallocated manufacturing overhead directly as a year-end write-off to Cost of Goods Sold. Post the entry to T-accounts