# Question

Crenshaw uses a job order costing system to account for projects. It applies manufacturing overhead to jobs on the basis of direct labor hours and pays its direct labor workers \$25 per hour. The following relates to activity for the month of December:
Manufacturing overhead budgeted (estimated on December 1) . . . . . . . . . \$133,000
Budgeted driver activity (DLH) (estimated on December 1) . . . . . . . . . . . 1,900 DLH
Direct materials purchased in December . . . . . . . . . . . . . . . . . . . . . . . . . . . . \$125,000
Direct materials used in December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Actual direct labor costs in December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000
Actual manufacturing overhead in December . . . . . . . . . . . . . . . . . . . . . . . 150,000
Cost of jobs completed in December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275,000
Revenue earned in December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000
Cost of goods sold in December (prior to adjusting for overhead) . . . . . . . . 325,000
Selling and administrative costs in December . . . . . . . . . . . . . . . . . . . . . . . . 250,000
Materials Inventory, December 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Work in Process Inventory, December 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000
Finished Goods Inventory, December 1 . . . . . . . . . . . . . . . . . . . . . . . . . . 105,000

a. Record the purchase of direct materials in December. Assume all purchases are made on account.
b. Record the cost of direct materials applied to jobs in December.
c. Record the cost of direct labor applied to jobs in December.
d. Record the actual cost of manufacturing overhead incurred in December. Assume all overhead costs were paid in cash.
e. Record the cost of manufacturing overhead applied to jobs in December.
f. Record revenue and the related cost of jobs sold in December. Assume all sales are made on account.
g. Record December selling and administrative costs. Assume all selling and administrative costs were paid in cash.
h. Close the Manufacturing Overhead account directly to Cost of Goods Sold on December 31.
i. Compute the company’s December income. Ignore taxes.

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• CreatedApril 17, 2014
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