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.

Transcribed Image Text:

Direct materials Work in process Finished goods January 1, 2012 $9,900 6,100 61,000 December 31, 2012 $11,000 28,000 32,000