Job Cost Journal Entries and T Accounts

Following are certain operating data for Redwood Manufacturing Company for January 2016:

Materials InventoryWork in Process InventoryFinished Goods InventoryBeginning inventory$40,000$50,000$80,000Ending inventory70,00060,00056,000

Total sales were $2,000,000, on which the company earned a 40% gross profit. Redwood uses a predetermined manufacturing overhead rate of 110% of direct labor costs. Manufacturing overhead applied was $396,000. Exclusive of indirect material used, total manufacturing overhead incurred was $300,000; it was under-applied by $24,000.

Required

Compute the following items. (Set up T accounts for Materials Inventory, Work in Process Inventory, Finished Goods Inventory, and Manufacturing Overhead; fill in the known amounts; and then use the normal relationships among the various accounts to compute the unknown amounts.)

1. Cost of goods sold.
2. Cost of goods manufactured.
3. Direct labor incurred
4. Direct material used.
5. Indirect material used.
6. Total materials purchased.