Problem 3

On December 1, Sprint Manufacturing purchased 5 rolls of paper on account at $125 per roll for use in production of the December magazine. On December 5, 4 rolls of paper were issued to Job 100 in the printing department. A worker in the printing department logged 45 hours in Job 100 at a labor rate of $20 per hour. Sprint Manufacturing expected to incur $300,000 of total factory overhead costs for the year and 10,000 hours of direct labor. On December 20, the magazine was completed and shipped to the magazine stand with an invoice for $5,500.

Journalize the following (using T-Accounts as necessary):

1. The purchase of the paper.

2. The transfer of raw materials to work in process

3. The application of direct labor

4. The application of manufacturing overhead to Job 100 based on direct labor hours

5. The transfer of Job 100 to finished goods at cost

6. Gross profit on Job 100 is ________________.