The Collins Corporation Uses a Job-Order Costing System and Applies

question 118

Essay

The Collins Corporation uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of the cost of materials used in production. At the beginning of the most recent year, the following estimates were made as a basis for computing the predetermined overhead rate for the year: manufacturing overhead cost, $200,000; direct materials cost, $160,000. The following transactions took place during the year (all purchases and services were acquired on account):
Raw materials were purchased, $86,000.Raw materials were requisitioned for use in production (all direct materials), $98,000.Utility costs were incurred in the factory, $15,000.Salaries and wages were incurred as follows:

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Definitions:

Net Income

The total profit of a company after all expenses, including taxes and operating expenses, have been deducted from total revenues.

Common Shares

Equity investments that represent a portion of ownership in a corporation, giving shareholders voting rights and potential dividends.

Stockholders' Equity

The ownership interest of shareholders in the assets of a corporation after all debts have been paid.

Retained Earnings

Retained earnings are the portion of a company's profits that are kept or reinvested in the business instead of being distributed to shareholders as dividends.