Margery, Inc Job No 791 Was the Only Job in Production as of Firm

question 21

Essay

Margery, Inc., which uses a job-costing system, is a labor-intensive firm, with many skilled craftspeople on the payroll. Job no. 789 was the only job in process on January 1, having costs of $22,500 as of that date. Direct materials used and direct labor incurred during January were: $\begin{array}{rrr}\text { Job No. }&\text {Direct Materials}&\text { Direct Labor }\\789 & \$ 2,000 & \$ 6,000 \\790 & 9,000 & 10,000 \\791 & 14,000 & 8,000\end{array}$
Job no. 791 was the only job in production as of January 31.
Required:
A. Should Margery use direct labor or machine hours as a cost driver. Why?
B. Assume that the company decided to use direct labor as its cost driver. If the budgeted amounts of direct labor and manufacturing overhead are anticipated to be $200,000 and $300,000, respectively, what is the firm's predetermined overhead rate?
C. Compute the cost of work-in-process inventory as of January 31.
D. Compute the cost of jobs completed during January.
E. Suppose that the company sold all of its completed jobs, adding a 40% markup to cost. How much would the firm report as sales revenue?

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Definitions:

Anal Examinations

Medical procedures that involve the inspection and evaluation of the anus and rectum for disease or abnormalities.

Rectal Examinations

A physical examination in which a doctor or nurse inserts a finger into the rectum to check for abnormalities of organs or other structures in the pelvis or abdomen.

Lung Expansion

The process of the lungs increasing in volume during inhalation, important for gas exchange.

Sitting Position

A posture where the upper body is upright and supported, with the buttocks resting on a chair or surface.