Question

The University of

ManchesterManchester

Press is wholly owned by the university. It performs the bulk of its work for other university​ departments, which pay as though the press were an outside business enterprise. The press also publishes and maintains a stock of books for general sale. The press uses normal costing to cost each job. Its​job-costing system has two​ direct-cost categories​ (direct materials and direct manufacturing​ labor) and one​ indirect-cost pool​ (manufacturing overhead, allocated on the basis of direct manufacturing labor​ costs). The following data​ (in thousands) pertain to

20172017​:

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Direct materials and supplies purchased on credit

$840

Direct materials used

720

Indirect materials issued to various production departments

100

Direct manufacturing labor

1,310

Indirect manufacturing labor incurred by various production departments

980

Depreciation on building and manufacturing equipment

430

Miscellaneous manufacturing overhead* incurred by various production departments

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

530

Manufacturing overhead allocated at 160% of direct manufacturing labor costs

?

Cost of goods manufactured

4,130

Revenues

8,100

Cost of goods sold (before adjustment for under- or overallocated manufacturing overhead)

4,030

Inventories, December 31, 2016 (not 2017):

Materials Control

180

Work-in-Process Control

50

Finished Goods Control

580

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.Requirement 1. Identify the components of the overview diagram of the​ job-costing system at the University of

ManchesterManchester

Press.

A	​}	B down arrow↓	A Indirect Cost Pool B Manufacturing Overhead
C	​}	D down arrow↓	C Cost Allocation Base D Direct Manufacturing Labor Cost
E	​}	F G	E Cost Object: Print Job F Indirect Costs G Direct Costs

H

​}

up arrow↑ I

up arrow↑ J

H Direct Costs I Direct Materials J Direct Manufacturing Labor

Requirement 2. Prepare journal entries to summarize the

20172017

transactions. As your final​ entry, dispose of the​ year-end under- or overallocated manufacturing overhead as a​ write-off to Cost of Goods Sold. Number your entries. Explanations for each entry may be

omitted.​(Record

debits​ first, then credits. Exclude explanations from any journal​ entries.)Direct materials and supplies purchased on​ credit,

$ 840$840.

Journal Entry
		Accounts	Debit	Credit
			(In thousands)
(1)		Materials Control	840
		Accounts Payable Control	720
			100
		Accounts Payable Control		1660

Choose from any list or enter any number in the input fields and then click Check Answer.

Answer 1

Answer 1.
A. Indirect Cost Pool
B. Manufacturing Overhead
C. Cost Allocation Base
D. Direct Manufacturing Labor
E. Cost Objects: Print Jobs
F. Indirect Costs
G. Direct Costs
H. Direct Costs
I. Direct Materials
J. Direct Manufacturing Labor
Answer 2.
Journal Entry
Date	Particulars	Dr. Amt.	Cr. Amt.
1	Material Control	840.00
	Accounts Payable Control		840.00
2	WIP Control	720.00
	Material Control		720.00
3	Manufacturing Overhead Control	100.00
	Material Control		100.00
4	WIP Control	1,310.00
	Manufacturing Overhead Control	980.00
	Wages Payable Control		2,290.00
5	Manufacturing Overhead Control	430.00
	Accumulated Depreciation - Plant & Equip.		430.00
6	Manufacturing Overhead Control	530.00
	Various Liabilities		530.00
7	WIP Control	2,096.00
	Manufacturing Overhead Allocated		2,096.00
	Manufacturing Overhead Allocated = 160% X $1,310 (DL Costs)
	Manufacturing Overhead Allocated = $2,096
8	Finished Goods Control	4,130.00
	WIP Control		4,130.00
9	Accounts Receivable / Cash	8,100.00
	Sales Revenue		8,100.00
10	Cost of Goods Sold	4,030.00
	Finished Goods Inventory		4,030.00
11	Manfacturing Overhead Allocated	2,096.00
	Manufacturing Overhead Control		1,940.00
	Cost of Goods Sold		156.00

Answer 3.
Material Control					WIP Control					Manufacturing Overhead Control
Beg. Bal.	180.00	720.00	2		Beg. Bal.	50.00				3	100.00	1,940.00	11
1	840.00	100.00	3		2	720.00	4,130.00	8		4	980.00
					4	1,310.00				5	430.00
					7	2,096.00				6	530.00
End. Bal.	200.00				End. Bal.	46.00				End. Bal.	100.00
Finished Goods Control					Cost of Goods Sold					Manufacturing Overhead Allocated
Beg. Bal.	580.00	4,030.00	10		10	4,030.00	156.00	11		11	2,096.00	2,096.00	7
8	4,130.00
End. Bal.	680.00				End. Bal.	3,874.00				End. Bal.	-