Drew Corp. designs and manufactures mascot uniforms for high school, college, and professional sports teams. Since each team's uniform is unique in color and design, Drew uses a job order costing system. On January 1, the T-accounts for some of Drew's primary balance sheet accounts were as follows:

During the year, the following events occurred:
1. Drew purchased raw materials costing $86,000 on account.
2. Drew used $93,000 of raw materials in production. Of these, 70% were classifi ed as direct materials and 30% as indirect materials. (Drew maintains a single Raw Materials Inventory account.)
3. Drew used 31,200 hours of direct labor. The company's average direct labor rate was
$7.50 per hour (credit Wages Payable).
4. The company's only indirect labor cost was the salary of a security guard hired to watch the company's shop after hours. The guard's annual salary was $25,000 (credit Wages Payable).
5. Other manufacturing overhead costs the company incurred on account totaled $70,000.
6. Drew applied $130,000 in manufacturing overhead.
7. The company completed production of goods costing $326,000.
8. The company's Cost of Goods Sold balance was $303,750 before adjusting for over- or underapplied overhead.
9. Sales revenue was $425,000 (all sales were made on account).
10. Drew collected $450,000 from customers.
11. The company paid accounts payable of $100,000.
12. At year-end, all wages earned during the year had been paid.

a. Record the transactions above in the appropriate T-accounts and calculate ending balances. Create new T-accounts if needed.
b. Calculate total manufacturing costs for the year.
c. Calculate cost of goods available for sale during theyear.

  • CreatedFebruary 21, 2014
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