The University of

ManchesterManchester

Press is wholly owned by the university. It performs the bulk of its work for other university departments, which pay as though the press were an outside business enterprise. The press also publishes and maintains a stock of books for general sale. The press uses normal costing to cost each job. Itsjob-costing system has two direct-cost categories (direct materials and direct manufacturing labor) and one indirect-cost pool (manufacturing overhead, allocated on the basis of direct manufacturing labor costs). The following data (in thousands) pertain to

20172017:

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Direct materials and supplies purchased on credit

$840

Direct materials used

720

Indirect materials issued to various production departments

100

Direct manufacturing labor

1,310

Indirect manufacturing labor incurred by various production departments

980

Depreciation on building and manufacturing equipment

430

Miscellaneous manufacturing overhead* incurred by various production departments

(ordinarily would be detailed as repairs, photocopying, utilities, etc.)

530

Manufacturing overhead allocated at 160% of direct manufacturing labor costs

?

Cost of goods manufactured

4,130

Revenues

8,100

Cost of goods sold (before adjustment for under- or overallocated manufacturing overhead)

4,030

Inventories, December 31, 2016 (not 2017):

Materials Control

180

Work-in-Process Control

50

Finished Goods Control

580

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.Requirement 1. Identify the components of the overview diagram of the job-costing system at the University of

ManchesterManchester

Press.

A

}

B

down arrow

A	Indirect Cost Pool
B	Manufacturing Overhead

C

}

D

down arrow

C	Cost Allocation Base
D	Direct Manufacturing Labor Cost

E

}

F

G

E	Cost Object: Print Job
F	Indirect Costs
G	Direct Costs

H

}

up arrow

I

up arrow

J

H	Direct Costs
I	Direct Materials
J	Direct Manufacturing Labor

Requirement 2. Prepare journal entries to summarize the

20172017

transactions. As your final entry, dispose of the year-end under- or overallocated manufacturing overhead as a write-off to Cost of Goods Sold. Number your entries. Explanations for each entry may be

omitted.(Record

debits first, then credits. Exclude explanations from any journal entries.)Direct materials and supplies purchased on credit,

$ 840$840.

Journal Entry

Accounts

Debit

Credit

(In thousands)

(1)

Materials Control

840

Accounts Payable Control

720

100

Accounts Payable Control

1660

Choose from any list or enter any number in the input fields and then click Check Answer.