Gold Nest Company of Guandong, China, is a family owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $85,000 of manufacturing overhead for an estimated activity level of $50.000 direct labor dollars. At the beginning of the year, the inventory balances were as follows: Raw materials Work in process Finished goods $10,300 54,600 $ 8.800 During the year, the following transactions were completed Raw materials purchased on account. $163,000, b. Raw materials used in production, $149,000 (materials casting $125,000 were charged directly to jobs the remaining materials were indirect C. Costs for employee services were incurred as follows: Direct labor Indirect labor Sales commissions Administrative salaries $ 159,000 $ 192,300 $ 28,000 541,000 d. Rent for the year was $18.900 (513,400 of this amount related to factory operations, and the remainder related to selling and administrative activities), e Utility costs incurred in the factory, $12.000, Advertising costs incurred, $12,000. 9 Depreciation recorded on equipment $24,000. ($15,000 of this amount related to equipment used in factory operations, the remaining $9.000 related to equipment used in selling and administrative activities) h. Manufacturing overhead cost was applied to jobs. 5? Gold Nest Company of Guandong, China, is a family owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $85,000 of manufacturing overhead for an estimated activity level of $50.000 direct labor dollars. At the beginning of the year, the inventory balances were as follows: Raw materials Work in process Finished goods $10,300 54,600 $ 8.800 During the year, the following transactions were completed Raw materials purchased on account. $163,000, b. Raw materials used in production, $149,000 (materials casting $125,000 were charged directly to jobs the remaining materials were indirect C. Costs for employee services were incurred as follows: Direct labor Indirect labor Sales commissions Administrative salaries $ 159,000 $ 192,300 $ 28,000 541,000 d. Rent for the year was $18.900 (513,400 of this amount related to factory operations, and the remainder related to selling and administrative activities), e Utility costs incurred in the factory, $12.000, Advertising costs incurred, $12,000. 9 Depreciation recorded on equipment $24,000. ($15,000 of this amount related to equipment used in factory operations, the remaining $9.000 related to equipment used in selling and administrative activities) h. Manufacturing overhead cost was applied to jobs. 5
