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:

Persuasive Requests

Appeals or proposals designed to convince someone to undertake a specific action or adopt a particular standpoint.

Specific Action

A particular or defined course of conduct or procedure directed towards achieving a given goal or objective.

Audience Decision

The outcome or action taken by the audience after being exposed to a message or piece of communication.

Persuasive Claim

An assertion made in an attempt to convince or influence others to accept a particular viewpoint or to take a specific action.