Paulson Enterprises Uses a Job Costing System

question 204

Essay

Paulson Enterprises uses a job costing system.Record the following transactions in Paulson Enterprises's general journal for the current month:
a)Purchased raw materials on account,$75,000.
b)Requisitioned $44,500 of direct materials and $7,000 of indirect materials for use in production.
c)Factory payroll incurred,$90,000; 80% direct labor,20% indirect labor.
d)Recorded depreciation expense factory equipment $12,000,and other manufacturing overhead of $42,100 (credit accounts payable).
e)Allocated manufacturing overhead costs based on 120% of direct labor cost.
f)Cost of completed production for the current month,$142,000.
g)Cost of finished goods sold,$115,000; selling price,$175,000 (all sales on account).

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Definitions:

Diminishing Marginal Utility

The principle that as a person increases consumption of a product, there is a decline in the marginal utility that person derives from consuming each additional unit of that product.

Income Effect

The change in an individual's or economy's income and how that change will affect the quantity demanded of a good or service.

Substitution Effect

The change in demand for a good that results from a change in its price, making consumers more likely to purchase more of a less expensive alternative or less of a more expensive one.

Demand Curves

Graphs showing the relationship between the price of a good and the quantity demanded by consumers, typically downward-sloping.