Problem 2 (Chapter 4) Martin Sound, Inc. which uses a job-order costing system, had two jobs in work-in-process at the start of 20x1: job no. 64 ($84,000) and job no. 65 ($53,500). There was no finished goods inventory at the beginning of 20x1. The following information is available: a. The company uses a normal costing and applies manufacturing overhead on the basis of machine hours. For year 20x1, its budgeted manufacturing overhead was $840,000, and budgeted machine activity for the year was 16,000 hours. b. The company worked on four jobs during the first quarter of 20x1. Direct materials used, direct labor incurred, and machine hours consumed during the first quarter were as follows: Job No. 64 Direct Material $21,000 Direct Labor Machine Hours $35,000 1,200 65 22,000 700 66 44,000 65,000 2,000 67 15,000 8,800 500 c. Actual manufacturing overhead during the first quarter included charges for depreciation ($34,000), indirect labor ($60,000), indirect materials used ($5,000), and other factory costs ($139,500). d. The company also had administration employee salary ($50,000), selling expenses ($20,000) and R&D expenses ($15,000) in the first quarter. e. Martin Sound completed job no. 64 and job no. 65. Job no. 64 was in finished goods inventory on March 31. Job no. 65 was sold on account, producing a profit of $34,700. Job no. 66 and job no. 67 were in work-in-process at the end of the first quarter.