AAA Manufacturing Company's raw material inventory on August 31 was $300,000. In September, direct material purchases were $800,000, and factory direct manufacturing labor was $220,000. Indirect expenses incurred in the same month were indirect materials $60,000, indirect labor $28,000, plant rent $10,000, plant $6,000 for utilities and $15,000 for depreciation of plant equipment. The estimated manufacturing cost allocation rate is 50% of the direct manufacturing labor. The company started production of job numbers 502 and 503 in August and started production of job number 504 in September. All three jobs were completed in September. The following are the direct production costs for these three jobs:

Job No. 502 Job No. 503 Job No. 504

Balance on August 31st:
Direct material	$28,000	$20,000
direct labor	$19,000	$22,000
Direct production cost in September:
Direct material	$200,000	$270,000	$90,000
Direct labor	$40,000	$56,000	$160,000

Require:

1. Try to calculate the total cost of job numbers 502, 503, and 504 using the normal costing method.

2. Record the following transactions and events in September in a journal (no description required )Pieces:

i. Purchasing Direct Materials (Full Credit)

ii. Consumption of indirect materials

iii. Allocate indirect manufacturing labor

iv. Payment of plant rent and plant water and electricity bills in cash

v. Depreciation of factory equipment

3. Ms. Hu, general manager of AAA manufacturing company, do not understand why the company needs to use normal

Cost method, it is believed that using the actual cost method is more accurate in calculating the cost of work. try

Express your opinion, explain to Miss Hu the difference between the two methods, and explain as

Most companies still use the normal costing method to calculate costs.

Answer rating: 100% (QA)

Answer Solution AAA Manufacturing Company Answer 1 Job 502 Job 503 Job 504 Total Note Beginning work ... View the full answer