CHAPTER 2A

JOB ORDER COSTING

CHAPTER LEARNING OBJECTIVES

1. Describe cost systems and the flow of costs in job order system. Cost accounting involves the procedures for measuring, recording, and reporting product and service costs. From the data accumulated, companies determine the total cost and the unit cost of each product. The two basic types of cost accounting systems are process cost and job order cost.

In job order costing, companies first accumulate manufacturing costs in three accounts: Raw Materials Inventory, Factory Labor, and Manufacturing Overhead. They then assign the accumulated costs to Work in Process Inventory and eventually to Finished Goods Inventory and Cost of Goods Sold.

2. Use a job cost sheet to assign costs to work in process. A job cost sheet is a form used to record the costs chargeable to a specific job and to determine the total and unit costs of the completed job. Job cost sheets constitute the subsidiary ledger for the Work in Process Inventory control account.

3. Demonstrate how to determine and use the predetermined overhead rate. The predetermined overhead rate is based on the relationship between estimated annual overhead costs and estimated annual operating activity. This is expressed in terms of a common activity base, such as direct labor cost. Companies use this rate to assign overhead costs to work in process and to specific jobs.

4. Record manufacturing and service jobs completed and sold. When jobs are completed, companies add the cost to Finished Goods Inventory and remove it from Work in Process Inventory. When a job is sold, companies increase Cost of Goods Sold and decrease Finished Goods Inventory for the cost of the goods.

5. Distinguish between under- or overapplied manufacturing overhead. Underapplied manufacturing overhead indicates that the overhead assigned to work in process is less than the overhead incurred. Overapplied overhead indicates that the overhead assigned to work in process is greater than the overhead incurred.

TRUE-FALSE STATEMENTS

1. Cost accounting is primarily concerned with accumulating information about product costs.

2. A job order cost system is most appropriate when a large volume of uniform products is produced.

3. A process cost accounting system is appropriate for similar products that are continuously mass produced.

4. The perpetual inventory method cannot be used in a job order cost system.

5. A job order cost system and a process cost system are two alternative methods for accumulating product costs.

6. A job order cost system identifies costs with a particular job rather than with a set time period.

7. A company may use either a job order cost system or a process cost system, but not both.

8. Raw Materials Inventory, Factory Labor, and Manufacturing Overhead are all control accounts is a job order cost system.

9. Accumulating and assigning manufacturing costs are two important activities in a job order cost system.

10. Recording the acquisition cost of raw materials is a part of accumulating manufacturing costs.

11. The acquisition of raw materials increases an asset.

12. The Work in Process Inventory account is decreased for all raw materials purchase returns and allowances.

13. When raw materials are received, no effort is made at this point to associate the cost of the materials with specific jobs.

14. When raw materials are purchased, the Work in Process Inventory account is increased.

15. Factory labor should be assigned to selling and administrative expenses on a proportionate basis.

16. Benefits and payroll taxes associated with factory workers should be accumulated as a part of Factory Labor.

17. Job order cost sheets constitute the subsidiary ledger of the control account, Work in Process Inventory.

18. In a job order cost system, each entry to the Work in Process Inventory account should be accompanied by a posting to one or more job cost sheets.

19. Direct materials requisitioned increase the Work in Process Inventory account and the job cost sheets for the individual jobs on which the materials are used.

20. Manufacturing overhead is the only product cost that can be assigned to jobs as soon as the costs are incurred.

21. There should be a separate job cost sheet for each job.

22. Actual manufacturing overhead costs are assigned to each job by tracing each overhead cost to a specific job.

23. The equation for the predetermined overhead rate is estimated annual overhead costs divided by an estimated volume of annual operating activity.

24. Actual manufacturing overhead costs should be recorded in the Work in Process Inventory account as they are incurred.

25. A job order cost sheet be destroyed as soon as the job is complete.

26. Finished Goods Inventory is increased for the cost of jobs completed during a period.

27. When goods are sold, Cost of Goods Sold is increased and Work in Process Inventory account is decreased.

28. Total manufacturing costs for a period consists of the costs of direct materials used, the cost of direct labor incurred, and the manufacturing overhead applied during the period.

29. Overapplied overhead means that actual manufacturing overhead costs were greater than the manufacturing overhead costs applied to jobs.

30. At the end of the year, the amount of the overapplied overhead is recorded as a decrease to Cost of Goods Sold.

31. A cost accounting system consists of manufacturing cost accounts that are fully integrated into the accounting records of a company.

32. The cost of raw materials purchased is recorded as a decrease to Raw Materials Inventory when materials are received.

33. Requisitions for direct materials are recorded daily to the individual job cost sheets.

34. The predetermined overhead rate is based on the relationship between estimated annual overhead costs and estimated volume of annual operating activity expressed in terms of a common activity base.

35. At the end of the year, underapplied overhead is usually recorded as a decrease to Cost of Goods Sold.

Answers to True-False Statements

MULTIPLE CHOICE QUESTIONS

36. Which of the following is one of the components of cost accounting?

a. It involves measuring product costs.

b. It involves the determination of company profits.

c. It requires GAAP to be applied.

d. It requires cost minimizing principles.

37. A major purpose of cost accounting is to

a. classify all costs as operating or nonoperating.

b. measure, record, and report period costs.

c. provide information to stockholders for investment decisions.

d. measure, record, and report product costs.

38. The two basic types of cost accounting systems are

a. job order and job accumulation systems.

b. job order and process cost systems.

c. process cost and batch systems.

d. job order and batch systems.

39. A process cost system would most likely be used by a company that makes

a. videos.

b. repairs to automobiles.

c. breakfast cereal.

d. college graduation announcements.

40. Which of the following would be accounted for using a job order cost system?

a. The production of cell phones.

b. The production of automobiles.

c. The refining of petroleum.

d. The construction of a new campus building.

41. Process costing is used when

a. the production process is continuous.

b. production is aimed at filling a specific customer order.

c. dissimilar products are involved.

d. costs are to be assigned to specific jobs.

42. Process costing is not used when

a. similar goods are being produced.

b. large volumes are produced.

c. jobs have distinguishing characteristics.

d. a series of connected manufacturing processes is necessary.

43. An important feature of a job order cost system is that each job

a. must be similar to previous jobs completed.

b. has its own distinguishing characteristics.

c. must be completed before a new job is accepted.

d. consists of one unit of output.

44. As of December 31, 2022, Stand Still Industries had $2,500 of raw materials inventory. At the beginning of 2022, there was $2,000 of materials on hand. During the year, the company purchased $375,000 of materials; however, it paid for only $312,500. How much inventory was requisitioned for use on jobs during 2022?

a. $312,000

b. $374,500

c. $375,500

d. $313,000

Ex. 161

The manufacturing operations of Beatly, Inc. had the following balances at the beginning and end of January:

January 1 January 31

Raw Materials Inventory $12,000 $13,000

Work in Process Inventory 21,000 23,000

Finished Goods Inventory 14,000 12,000

Beatly transferred $270,000 of completed goods out of Work in Process Inventory during January.

Instructions

Compute the cost of goods sold for January.

Ex. 162

A selected list of accounts used by Cline Manufacturing Company follows:

Code Code

A Raw Materials Inventory D Factory Labor

B Work in Process Inventory E Manufacturing Overhead

C Finished Goods Inventory F Cost of Goods Sold

Cline Manufacturing Company uses a job order system.

Instructions

Place the appropriate code letter in the columns indicating the appropriate account(s) to be increased and decreased for the transactions listed below.

———————————————————————————————————————————

Account(s) Account(s)

Transactions Increased Decreased

———————————————————————————————————————————

1. Raw materials were purchased.

———————————————————————————————————————————

2. Issued a check to Dixon Machine Shop for

repair work on factory equipment.

———————————————————————————————————————————

3. Direct materials were requisitioned for Job 280.

———————————————————————————————————————————

4. Factory labor was incurred.

———————————————————————————————————————————

5. Assigned direct labor and indirect labor used.

———————————————————————————————————————————

6. The production department requisitioned indirect

materials for use in the factory.

———————————————————————————————————————————

7. Overhead was applied to production based on a

predetermined overhead rate of $8 per labor hour.

———————————————————————————————————————————

8. Goods that were completed were transferred to

finished goods.

———————————————————————————————————————————

9. Goods costing $80,000 were sold.

———————————————————————————————————————————

10. Recorded factory depreciation.

———————————————————————————————————————————

Ex. 163

Finn Manufacturing Company uses a job order cost accounting system and keeps perpetual inventory records. Using the grid below, record the following transactions during the month of June. Use (+) to indicate increases and (–) to indicate decreases.

June 1 Purchased raw materials for $20,000.

8 Raw materials requisitioned by production:

Direct materials $8,000

Indirect materials 1,000

15 Incurred factory utilities, $2,100 and repairs for factory equipment, $8,000.

25 Incurred $108,000 of factory labor.

25 Time tickets indicated the following:

Direct Labor (7,000 hrs × $12 per hr) = $84,000

Indirect Labor (3,000 hrs × $8 per hr) = 24,000

$108,000

25 Applied manufacturing overhead to production based on a predetermined overhead rate of $7 per direct labor hour worked.

28 Goods costing $18,000 were completed in the factory and were transferred to finished goods.

30 Goods costing $15,000 were sold.

Ex. 164

Selected accounts of Kosar Manufacturing Company at year end appear in the grid below:

Instructions

Explain the probable transaction that took place for each of the items identified by letters in the accounts. For example:

(a) Raw materials costing $40,000 were purchased.

Ex. 165

Sardin Company began March with a $17,000 balance in Work in Process Inventory from Job 324. Information from job cost sheets shows the following additional costs assigned during March, April, and May of 2022:

Manufacturing Costs Assigned

Job No. March April May

324 $26,000

325 20,000 $28,000 $15,000

326 41,000 11,000

327 16,000 39,000

328 34,000 51,000

Job 324 was completed in March. Jobs 325 and 327 were completed in May, and Job 326 was completed in April. All of the jobs were sold during the month after completion.

Instructions

Calculate the balances of the Work in Process Inventory and Finished Goods Inventory at the end of May.

Ex. 166

The gross earnings of factory workers for Dinkel Company during the month of January are $480,000. Of the total factory labor cost, 75% is attributable to direct labor and 25% is attributable to indirect labor.

Instructions

Using the grid below:

(a) Record the factory labor costs for the month of January.

(b) Record the assignment of factory labor to production.

(c) Record the application of manufacturing overhead to production, assuming the predetermined overhead rate is 125% of direct labor cost.

Use (+) to indicate increases and (–) to indicate decreases.

Ex. 167

Foster Manufacturing uses a job order cost accounting system. On April 1, the company has Work in Process Inventory of $7,600 and two jobs in process: Job No. 221, $3,600, and Job No. 222, $4,000. During April, a summary of source documents reports the following:

For Materials Requisition Slips Labor Time Tickets

Job No. 221 $1,200 $ 2,100

222 1,700 2,200

223 2,400 2,900

224 2,600 2,800

General use 600 400

Totals $8,500 $10,400

Foster applies manufacturing overhead to jobs at an overhead rate of 70% of direct labor cost. Job No. 221 is completed during the month.

Instructions

(a) Using the grid below:

(1) Enter the beginning Work in Process Inventory balance, prepare summary entries to record the raw materials requisitioned, factory labor used, the assignment of manufacturing overhead to jobs, and the completion of Job No. 221. Use (+) to indicate increases and (–) to indicate decreases.

(2) Calculate the balance of the Work in Process Inventory account at April 30.

(b) Prove the agreement of the Work in Process Inventory account with the job cost sheets.

Ex. 168

Manufacturing cost data for Dolan Company, which uses a job order cost system, are presented below:

Case A Case B

Direct materials used (a) $103,000

Direct labor $ 70,000 150,000

Manufacturing overhead applied 63,000 (d)

Total manufacturing costs 240,000 (e)

Work in Process Inventory, 1/1/22 (b) 45,000

Total cost of work in process 300,000 (f)

Work in Process Inventory, 12/31/22 (c) 40,000

Cost of goods manufactured 205,000 (g)

Instructions

Indicate the missing amount for each letter. Assume that overhead is applied on the basis of direct labor cost and that the rate is the same for both cases.

Ex. 169

Fort Corporation had the following transactions during its first month of operations:

1. Raw materials were purchased for $85,000.

2. Raw Materials of $30,000 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $6,000 was classified as indirect materials.

3. Factory labor costs incurred were $175,000.

4. Time tickets indicated that $145,000 was direct labor and $30,000 was indirect labor.

5. Manufacturing overhead costs incurred were $198,000.

6. Manufacturing overhead was applied at the rate of 150% of direct labor cost.

7. Goods costing $115,000 were still incomplete at the end of the month; the other goods were completed and transferred to finished goods.

8. Finished goods costing $100,000 to manufacture were sold.

Instructions

Using the grid below, record the above transactions for Fort Corporation. Use (+) to indicate increases and (–) to indicate decreases.

Ex. 170

Lando Company reported the following amounts for 2022:

Raw materials purchased $85,000

Beginning raw materials inventory 5,200

Ending raw materials inventory 4,500

Beginning finished goods inventory 7,600

Ending finished goods inventory 8,000

Direct labor used 20,000

Manufacturing overhead costs applied 30,000

Beginning work in process inventory 6,100

Ending work in process inventory 6,300

Instructions

Calculate (a) the cost of materials used in production and (b) total manufacturing costs.

Ex. 171

A job cost sheet of Fugate Company is given below.

Instructions

(1) What is the predetermined manufacturing overhead rate?

(2) What is the total cost and the unit cost of the completed job?

(b) Using the grid below, prepare the entry to record the completion of the job. Use (+) to indicate increases and (–) to indicate decreases.

Ex. 172

At May 31, 2022, the accounts of Kuhlmann Manufacturing Company show the following.

1. May 1 inventories—finished goods $12,600, work in process $14,700, and raw materials $8,200.

2. May 31 inventories—finished goods $8,500, work in process $22,900, and raw materials $7,100.

3. Additions to work in process inventory were: direct materials $77,400, direct labor $50,000, and manufacturing overhead applied $45,000.

4. Sales totaled $225,000.

Instructions

(a) Prepare a condensed cost of goods manufactured schedule.

(b) Prepare an income statement for May through gross profit.

Ex. 173

Watson Manufacturing Company employs a job order cost system and keeps perpetual inventory records. The following transactions occurred in the first month of operations:

1. Direct materials requisitioned during the month:

Job 101 $20,000

Job 102 16,000

Job 103 24,000

$60,000

2. Direct labor incurred and charged to jobs during the month was:

Job 101 $32,000

Job 102 28,000

Job 103 20,000

$80,000

3. Manufacturing overhead was applied to jobs worked on using a predetermined overhead rate based on 75% of direct labor costs.

4. Actual manufacturing overhead costs incurred during the month totaled $66,000.

5. Job 101 consisting of 1,000 units and Job 103 consisting of 200 units were completed during the month.

Instructions

(a) Using the grid below, record the above transactions and determine the ending balance for Work in Process Inventory. Use (+) to indicate increases and (–) to indicate decreases.

(b) Address the following:

1. How much manufacturing overhead was applied to Job 103 during the month?

2. Compute the unit cost of Jobs 101 and 103.

3. Prove the balance in Work in Process Inventory at the end of the month.

4. Determine if manufacturing overhead was under- or overapplied during the month. How much?

Ex. 174

Graham Manufacturing is a small manufacturer that uses machine hours as its activity base for assigned overhead costs to jobs. The company estimated the following amounts for 2022 for the company and had actual results for Job 62:

Company Job 62

Direct materials $60,000 $4,500

Direct labor $25,000 $2,500

Manufacturing overhead costs $72,000

Machine hours 90,000 1,350

During 2022, the actual machine hours totaled 95,000, and actual overhead costs were $71,000.

Ex. 174 (Cont.)

Instructions

(a) Compute the predetermined overhead rate.

(b) Compute the total manufacturing costs for Job 62.

(c) How much overhead is over or underapplied for the year for the company? Compute the amount and specify whether it is over- or underapplied.

(d) Compute the gross profit If Graham Manufacturing sells Job 62 for $14,000.

Ex. 175

The following inventory information is available for Ricci Manufacturing Corporation for the year ended December 31, 2022:

Beginning Ending

Inventories:

Raw materials $17,000 $19,000

Work in process 9,000 14,000

Finished goods 11,000 8,000

Total $37,000 $41,000

The following transactions occurred during 2022:

1. Purchased raw materials, $75,000.

2. Incurred factory labor, $80,000 (all direct labor).

3. Incurred the following overhead costs during the year: utilities $6,800, depreciation on manufacturing machinery $8,000, Manufacturing machinery repairs $9,200, factory insurance $9,000.

4. Assigned $80,000 of factory labor to jobs.

5. Applied $36,000 of manufacturing overhead to jobs.

Instructions

(a) Using the grid below, enter the beginning balances, record the above transactions, and then enter the ending balances. Use (+) to indicate increases and (–) to indicate decreases.

(b) From an analysis of the accounts, compute the following:

1. Raw materials used.

2. Completed jobs transferred to finished goods.

3. Cost of goods sold.

4. Under- or overapplied overhead.

Ex. 175 (Continued)

Ex. 176

Bergman Company allocates manufacturing overhead at $10 per direct labor hour. Job A890 required 3 pounds of direct materials at a cost of $25 per pound. Employees worked 15 hours to complete the job. Employees earn $20 per hour.

Instructions

Compute the total cost of Job 890.

Ex. 177

Job cost sheets for Howard Manufacturing are as follows:

Job No 210 Quantity 1,500

Manufacturing

Date Direct Materials Direct Labor Overhead

July 1 9,000 8,000 12,000

8 8,500

10 10,000

15 5,500

25 20,000

Job No 211 Quantity 1,200

Manufacturing

Date Direct Materials Direct Labor Overhead

July 1 5,000 6,000 9,000

10 9,000

15 8,000

20 7,000

27 12,000

Instructions

1. What was the balance in Work in Process Inventory on July 1 if these were the only unfinished jobs?

2. What was the predetermined overhead rate in June if overhead was applied on the basis of direct labor cost?

3. If July is the start of a new fiscal year and the overhead rate is 30% higher than in the preceding year, how much overhead should be applied to Job 210 in July?

4. Assuming Job 210 is complete, what is the total and unit cost of the job?

5. Assuming Job 211 is the only unfinished job at July 31, what is the balance in Work in Process Inventory on this date?

(b) Using the grid below, record the summary transactions for the assignment of costs to the jobs in July. Use (+) to indicate increases and (–) to indicate decreases. (Note: Make one entry in total for each manufacturing cost element.)

Ex. 177 (Continued)

Ex. 178

Garner Company begins operations on July 1, 2022. Information from job cost sheets shows the following:

Manufacturing Costs Assigned

Job No. July August September

100 $12,000 $8,800

101 10,800 9,700 $12,000

102 5,000

103 11,800 6,000

104 5,800 7,000

Job 102 was completed in July. Job 100 was completed in August, and Jobs 101 and 103 were completed in September. Each job was sold for 60% above its cost in the month following completion.

Instructions

(a) Compute the balance in Work in Process Inventory at the end of July.

(b) Compute the balance in Finished Goods Inventory at the end of September.

(c) Compute the gross profit for August.

Ex. 179

The accounting records of Roland Manufacturing Company include the following information:

Dec. 31 Jan. 1

Work in process inventory $ 20,000 $ 50,000

Finished goods inventory 120,000 150,000

Direct materials used 350,000

Direct labor 160,000

Manufacturing overhead is applied at a rate of 150% of direct labor cost.

Ex. 179 (Cont.)

Instructions

1. What is the total of the additions to Work in Process Inventory during the year?

2. What is the amount transferred to Finished Goods Inventory during the year?

3. What is the cost of goods sold?

Ex. 180

Grant Marwick and Associates, a CPA firm, uses job order costing to capture the costs of its audit jobs. There were no audit jobs in process at the beginning of November. Listed below are data concerning the three audit jobs conducted during November.

Rondelli Preston Lopez

Direct materials $900 $600 $300

Auditor labor costs $5,900 $6,600 $3,700

Auditor hours 66 88 45

Overhead costs are applied to jobs on the basis of auditor hours, and the predetermined overhead rate is $50 per auditor hour. The Rondelli job is the only incomplete job at the end of November. Actual overhead for the month was $10,500.

Instructions

(a) Determine the cost of each job.

(b) Indicate the balance of the Work in Process Inventory account at the end of November.

(c) Calculate the ending balance of the Operating Overhead account for November.

Ex. 181

Gallagher Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are estimated to total $425,000 for the year and machine usage is estimated at 125,000 hours. For the current year, $450,000 of manufacturing overhead costs are incurred and 130,000 hours are used.

Instructions

(a) Compute the predetermined manufacturing overhead rate for the year.

(b) What is the amount of under- or overapplied overhead at December 31?

(c) Assuming the under- or overapplied overhead for the year is not allocated to inventory accounts, indicate what accounts will be affected and how they will be affected (increase or decrease).

Ex. 182

Fancy Decorating uses a job order costing system to collect the costs of its interior decorating business. Each client's consultation is treated as a separate job. Overhead is applied to each job based on the number of decorator hours incurred. Listed below are data for the current year.

Estimated overhead $880,000

Actual overhead $910,000

Estimated decorator hours 40,000

Actual decorator hours 41,000

The company uses the account Operating Overhead in place of Manufacturing Overhead.

Ex. 182 (Cont.)

Instructions

(a) Compute the predetermined overhead rate.

(b) Indicate the accounts that will be affected by the application of overhead for the year, the amount, and the direction (increase or decrease).

(c) Determine whether operating overhead was under- or overapplied and by what amount.

Ex. 183

Martin Company applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for the year follows:

Actual manufacturing overhead $80,000

Estimated manufacturing overhead $75,000

Direct labor hours incurred 4,800

Direct labor hours estimated 5,000

Instructions

Compute (a) the predetermined overhead rate and (b) the amount of applied manufacturing overhead.

Ex. 184

Landis Company uses a job order cost system in each of its two manufacturing departments. Manufacturing overhead is applied to jobs on the basis of direct labor cost in Department A and on the basis of machine hours in Department B. In establishing the predetermined overhead rates for 2022, the following estimates were made for the year:

Department

A B

Manufacturing overhead $2,100,000 $1,400,000

Direct labor cost 1,500,000 1,200,000

Direct labor hours 100,000 100,000

Machine hours 200,000 400,000

During January, the job cost sheet showed the following costs and production data:

Department

A B

Direct materials used $195,000 $128,000

Direct labor cost incurred 100,000 110,000

Manufacturing overhead incurred 130,000 135,000

Direct labor hours incurred 8,000 8,400

Machine hours incurred 16,000 34,000

Instructions

(a) Compute the predetermined overhead rate for each department.

(b) Compute the total manufacturing cost assigned to jobs in January in each department.

(c) Compute the balance in the Manufacturing Overhead account at the end of January and indicate whether overhead is over- or underapplied.

Ex. 185

Edwards Company applies manufacturing overhead to jobs on the basis of machine hours used. Manufacturing overhead costs are estimated to total $1,800,000 for the current year and machine usage is estimated at 200,000 hours.

In January, $186,000 of overhead costs are incurred and 22,000 machine hours are used. For the remainder of the year, $1,940,000 of additional overhead costs are incurred and 214,000 additional machine hours are worked.

Instructions

(a) Compute the manufacturing overhead rate for the year.

(b) What is the amount of over- or underapplied overhead at January 31?

(c) What is the amount of over- or underapplied overhead at December 31?

Ex. 186

Klinger Company estimates that annual manufacturing overhead costs will be $4,800,000 for 2022. The actual overhead costs at the end of 2022 are $4,980,000. Activity base information for 2022 follows:

Activity Base Estimated Actual

Direct labor cost $3,000,000 $3,150,000

Direct labor hours 200,000 212,000

Machine hours 150,000 152,000

Instructions

(a) Compute the predetermined overhead rate for each activity base.

(b) Compute the amount of overhead applied in 2022 for each activity base.

(c) Compute the amount of under- or overapplied overhead for 2022 for each activity base.

Ex. 187

Jensen Manufacturing Company makes hair styling tools. In January 2022, Jensen incurs manufacturing costs of $13,000,000 for direct materials, direct labor, and manufacturing overhead. 20% of the total costs represents overhead applied. The overhead rate is $1 for every $2 of direct labor costs incurred. Inventory balances were:

January 1 January 31

Raw materials $300,000 $500,000

Work in process 600,000 400,000

Finished goods 400,000 200,000

At the end of January, there was $1,000 of overapplied overhead.

Instructions

(a) Determine the cost of raw materials purchased in January.

(b) Prepare a cost of goods manufactured schedule for January 2022.

(c) Compute cost of goods sold for January.

Ex. 188

The following information is available for Marks Company at December 31, 2022:

1. Inventory balances Beginning of Year End of Year

Finished Goods $14,000 $10,000

Work in Process 6,000 12,000

Raw Materials 10,300 6,500

2. Additions to Work in Process Inventory during the year were:

Direct materials $90,000

Direct labor 60,000

Manufacturing overhead applied 75,000

3. Sales totaled $310,000 for the year.

Instructions

(a) Prepare a condensed cost of goods manufactured schedule.

(b) Prepare an income statement for the year through gross profit.