Quark Spy Equipment manufactures espionage equipment. Quark uses a job-order costing system and applies overhead to jobs on the basis of direct labor-hours. For the current year, Quark estimated that it would work 39,000 direct labor-hours and incur $7,059,000 of manufacturing overhead cost. The following summarized information relates to January of the current year. The raw materials purchased include both direct and indirect materials.

Raw materials purchased on account	$	498,300
Direct materials requisitioned into production	$	458,600
Indirect materials requisitioned into production	$	34,600
Direct labor cost (2,800 hours @ $45 per hour)	$	126,000
Indirect labor cost (4,000 hours @ $20 per hour)	$	80,000
Depreciation on the factory building	$	93,400
Depreciation on the factory equipment	$	436,700
Utilities for the factory	$	39,100
Cost of jobs finished	$	1,225,200
Cost of jobs sold	$	1,169,100
Sales (all on account)	$	1,753,700

Required:

Prepare journal entries to record Quark's transactions for the month of January. Do not close out the manufacturing overhead account.

Journal entry worksheet

• Record the raw materials purchased on account.
• Record the direct materials requisitioned into production.
• Record the indirect materials requisitioned into production.
• Record the direct labor cost (2,800 hours @ $45 per hour).
• Record the entry for overhead applied.
• Record the indirect labor cost (4,000 hours @ $20 per hour).
• Record the depreciation on the factory building, equipment and utilities.
• Record the cost of jobs finished.
• Record the cost of jobs sold.
• Record the sales (all on account).

Dagger Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the total estimated manufacturing overhead was $259,940. At the end of the year, actual direct labor-hours for the year were 16,700 hours, manufacturing overhead for the year was underapplied by $16,800, and the actual manufacturing overhead was $253,940. The predetermined overhead rate for the year must have been closest to:

$14.86

$15.14

$13.33

$14.20