The Editions Sorbonne is wholly owned by the university. It performs the bulk of its work for other university departments, which pay as though the Editions Sorbonne were an outside business enterprise. The Editions Sorbonne also publishes and maintains a stock of books for general sale. A job-costing system is used to cost each job. There are two direct cost categories (direct materials and direct manufacturing labor) and one indirect-cost pool (manufacturing overhead, allocated on the basis of direct-labor costs).

The following data (in €000) pertain to 2007:

Direct materials and supplies purchased on account.......................................... €800

Direct materials used.............................................................................. 710

Indirect materials issued to various production departments................................ 100

Direct manufacturing labor....................................................................... 1300

Indirect manufacturing labor incurred by various departments............................ 900

Depreciation on building and manufacturing equipment..................................... 400

Miscellaneous manufacturing overhead* incurred by various

departments (ordinarily would be detailed as repairs, photocopying, utilities, etc.)....... 550

Manufacturing overhead allocated at 160% of direct manufacturing labor costs......... ?

Cost of goods manufactured...................................................................... 4120

Revenues............................................................................................. 8000

Cost of goods sold................................................................................... 4020

Stock, 31 December 2006:

Materials control.................................................................................... 100

Work-in-progress control.......................................................................... 60

Finished goods control............................................................................ 500

* The term 'manufacturing overhead' is not used uniformly. Other terms that are often encountered in printing companies include 'job overhead' and 'shop overhead'.

Required

1. Present an overview diagram of the job-costing system at the Editions Sorbonne.

2. Prepare general journal entries to summaries 2007 transactions. As your final entry, dispose of the year-end over- or under allocated manufacturing overhead as a direct write-off to Cost of Goods Sold. Number your entries. Explanations for each entry may be omitted.

3. Show posted T-accounts for all stocks, Cost of Goods Sold, Manufacturing Overhead Control and Manufacturing Overhead Allocated.