Question
QS. Alam Company is a manufacturing firm that uses job-order costing. The company applies overhead to jobs using a predetermined overhead rate based on
QS. Alam Company is a manufacturing firm that uses job-order costing. The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 45,000 machine-hours and incur $180,000 in manufacturing overhead cost. The following transactions were recorded for the year: a. Raw materials were purchased, $416,000. b. Raw materials were requisitioned for use in production, $420,000 ($380,000 direct and $40,000 indirect). c. The following employee costs were incurred: direct labor, $414,000; indirect labor, $60,000; and administrative salaries, $212,000. d. Factory utility costs, $20,000. e. Depreciation for the year was $81,000 of which $73,000 is related to factory operations and $8,000 is related to selling, general, and administrative activities. f. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 48,000 machine-hours. g. The cost of goods manufactured for the year was $1,004,000. h. Sales for the year totaled $1,416,000 and the costs on the job cost sheets of the goods that were sold totaled $989,000. i. The balance in the Manufacturing Overhead account was closed out to Cost of Goods Sold. Required: Pass the journal entries. You can assume that all transactions with employees, customers, and suppliers were conducted in cash.
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