Job$-$Order Costing

PROBLEM $3-25$ Journal Entries; T$-$Accounts; Financial Statements $[$L$01,$ L$02,$ L$03,$ L$04,[05,[06,[07]$

Southworth Company uses a job$-$order costing system and applies manufacturing overhead cost to jobs on the basis of the cost of direct materials used in production. Its predetermined overhead rate was based on a cost formula that estimated $$248,000$ of manufacturing overhead for an estimated allocation base of $$155,000$ direct material dollars. The following transactions took place during the year $($all purchases and services were acquired on account$)$:

a$.$ Raw materials purchased, $$142,000.$

b$.$ Raw materials requisitioned for use in production $($all direct materials$),$ $$150,000.$

c$.$ Utility bills incurred in the factory, $$21,000.$

d$.$ Costs for salaries and wages were incurred as follows:

Direct labor $.$

$$216,000$

Indirect labor.

$$90,000$

Selling and administrative salaries...

$$145,000$

e$.$ Maintenance costs incurred in the factory, $$15,000.$

f$.$ Advertising costs incurred, $$130,000.$

g$.$ Depreciation recorded for the year, $$50,000(90\%$ relates to factory assets, and the remainder relates to selling and administrative assets$).$

h$.$ Rental cost incurred on buildings, $$90,000(80\%$ of the space is occupied by the factory, and $20\%$ is occupied by sales and administration$).$

i$.$ Miscellaneous selling and administrative costs incurred, $$17,000.$

j$.$ Manufacturing overhead cost was applied to jobs, $

k$.$ Cost of goods manufactured for the year, $$590,000.$

Sales for the year $($all on account$)$ totaled $$1,000,000.$ These goods cost $$600,000$ according to their job cost sheets.

The balances in the inventory accounts at the beginning of the year were as follows:

Raw Materials

$$18,000$

Work in Process

$$24,000$

Finished Goods

$$35,000$

Required:

Prepare journal entries to record the above data.

Post your entries to T$-$accounts. $($Don$\text{'}$t forget to enter the opening inventory balances above.$)$ Determine the ending balances in the inventory accounts and in the Manufacturing Overhead account.

Prepare a schedule of cost of goods manufactured.

Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. Prepare a schedule of cost of goods sold.

Prepare an income statement for the year.

Job $218$ was one of the many jobs started and completed during the year. The job required $$3,600$ in direct materials and $400$ hours of direct labor time at a rate of $$11$ per hour. If the job contained $500$ units and the company billed at $75\%$ above the unit product cost on the job cost sheet, what price per unit would have been charged to the customer?