Question

Construction Company produces gadgets for the coveted small appliance market. The following data shows activity for the year 2012:
Costs incurred:
Purchases of direct materials (net) on credit.......... $ 126,000
Direct manufacturing labor cost ................ 85,000
Indirect labor ........................ 54,300
Depreciation, factory equipment ................ 37,000
Depreciation, office equipment ................. 7,700
Maintenance, factory equipment ................ 24,000
Miscellaneous factory overhead ................ 9,800
Rent, factory building ................... 79,000
Advertising expense .................... 94,000
Sales commissions ..................... 36,000
Inventories:


Construction Co. uses a normal- costing system and allocates overhead to work in process at a rate of $ 2.90 per direct manufacturing labor dollar. Indirect materials are insignificant, so there is no inventory account for indirect materials.

Required
Prepare T- accounts for inventories and costs to record the transactions for 2012 including an entry to close out over- or underallocated overhead to cost of goodssold.


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  • CreatedJanuary 15, 2015
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