The Commonwealth Company Uses a Job-Order Costing System and Applies

question 24

Essay

The Commonwealth Company uses a job-order costing system and applies manufacturing overhead cost to jobs using a predetermined overhead rate based on the cost of materials used in production. At the beginning of the year, the following estimates were made as a basis for computing the predetermined overhead rate: manufacturing overhead cost, $186,000; direct materials cost, $155,000. The following transactions took place during the year (all purchases and services were acquired on account):
a. Raw materials purchased, $96,000.
b. Raw materials requisitioned for use in production (all direct materials), $88,000.
c. Utility bills incurred in the factory, $17,000.
d. Costs for salaries and wages incurred as follows: e. Maintenance costs incurred in the factory, $12,000.
f. Advertising costs incurred, $98,000.
g. Depreciation recorded for the year, $75,000 (75 percent relates to factory assets and the remainder relates to selling, general, and administrative assets).
h. Rental cost incurred on buildings, $80,000 (80 percent of the space is occupied by the factory, and 20 percent is occupied by sales and administration).
i. Miscellaneous selling, general, and administrative costs incurred, $12,000.
j. Manufacturing overhead cost was applied to jobs.
k. Cost of goods manufactured for the year, $480,000.
l. Sales for the year (all on account) totaled $900,000. These goods cost $550,000 to manufacture.
Required:
Prepare journal entries to record the information above. Key your entries by the letters a through l.

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Definitions:

Dominant Culture

The prevailing culture in a society, whose norms, values, and practices are widely accepted and exert significant influence over societal institutions and the behavior of individuals.

American Medical Association

A professional association and advocacy group for physicians and medical students in the United States, focusing on public health, ethics, and scientific advancement.

Credit Card Payments

Financial transactions made using a credit card to purchase goods or services.

Medical Practice

The profession or practice of providing healthcare diagnosis, treatment, and prevention of diseases.