Question 4: A manufacturing company incurs $50,000 in direct materials costs, $30,000 in direct labor costs, and $20,000 in manufacturing overhead costs during a production period. Outline the journal entries and ledger postings to record these manufacturing costs under the job order costing system.

Requirements:

1. Record the journal entry to recognize the purchase of direct materials.
2. Post the journal entry to the Raw Materials Inventory account in the ledger.
3. Record the journal entry to recognize direct labor costs incurred.
4. Post the journal entry to the Work-in-Process Inventory account in the ledger.
5. Calculate the predetermined overhead rate based on estimated overhead costs and allocate overhead to production.
6. Record the journal entry to apply overhead to work in process.
7. Post the journal entry to the Manufacturing Overhead account in the ledger.
8. Analyze how these transactions affect the company's balance sheet and income statement.
9. Discuss the importance of accurately tracking manufacturing costs for job order costing.
10. Evaluate strategies for controlling and reducing manufacturing costs to improve profitability.