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Question(s) / Instruction(s):

Almeda ducts, Inc., uses a job-order costing system. The company's inventory balances on April 1, the start of its fiscal year, were as follows:

  Raw materials                  $15,400 

  Work in process              $10,400 

  Finished goods                                $32,400 

During the year, the following transactions were completed:

a.            Raw materials were purchased on account, $200,000.

b.            Raw materials were issued from the storeroom for use in production, $190,500 (80% direct and 20% indirect).

c.             Employee salaries and wages were accrued as follows: direct labor, $72,000; indirect labor, $26,000; and selling and administrative salaries, $80,000.

d.            Utility costs were incurred in the factory, $41,000.

e.            Advertising costs were incurred, $49,000.

f.             Prepaid insurance expired during the year, $10,000 (90% related to factory operations, and 10% related to selling and administrative activities).

g.            Depreciation was recorded, $59,000 (85% related to factory assets, and 15% related to selling and administrative assets).

h.            Manufacturing overhead was applied to jobs at the rate of 175% of direct labor cost.

i.              Goods that cost $324,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse.

j.             Sales for the year totaled $700,900 and were all on account. The total cost to manufacture these goods according to their job cost sheets was $325,000.


1.            Prepare journal entries to record the transactions for the year.

2.            Prepare T-accounts for Raw Materials, Work in Process, Finished Goods, Manufacturing Overhead, and Cost of Goods Sold. Post the appropriate parts of your journal entries to these T-accounts (don't forget to enter the opening balances in your inventory accounts). Compute an ending balance in each account


(a)          Is Manufacturing Overhead underapplied or overapplied for the year? (Input the amount as positive value.

(b)          Prepare a journal entry to close this balance to Cost of Goods Sold.

4.  Prepare an income statement for the year.

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