Red Fire Inc. produces fire trucks. The company uses a normal job-order costing system to calculate its cost of goods manufactured. The company's policy is to price its job at cost plus 30% markup. On January 1, 2020, there was only one job in process, with the following costs:

Prepare entries and close out under- or over-applied overhead.

Job 200

Direct materials $13,500

Direct labour 18,000

Applied overhead 27,000

Total $58,500

The following balances were taken from the company's general ledger as of January 1, 2020:

Direct materials inventory $45,000

Finished goods inventory (for Job 100) 85,000

During the year 2020, the following events occurred:

Direct materials were purchased on account for $375,000.

Two more jobs were started: Job 300 and Job 400. Direct materials and direct labour costs incurred by each job in process during the year 2020 were as follows:

Job 200 Job 300 Job 400

Direct materials $150,000 $45,000 $35,000

Direct labour 130,000 45,000 25,000

The company incurred the following actual factory overhead during the year:

Factory rent $135,000

Factory supplies 55,500

Indirect labour 85,750

Jobs 100 and 200 were sold. Jobs 200 and 300 were completed.

Instructions

a. Calculate the total applied overhead for the year 2020. The factory overhead costs are applied to each job on the basis of direct labour dollars. b. Prepare simple job cost sheets for jobs 200, 300, and 400 for the year ended December 31, 2020. c. Determine whether the overhead is over-applied or under-applied. By how much?

Over-applied overhead: $23,750

d. Prepare a schedule of cost of goods sold, identifying both normal and adjusted cost of goods sold, for the year ended December 31, 2020. e. Calculate the selling price of Job 200.

Job 200: $693,550

f. Calculate the ending balances as of December 31, 2020, for the following accounts: Direct Materials and Work in Process.