Problem:
1. Quark Spy Equipment manufactures espionage equipment. Quark uses a job-order cost system and applies overhead to jobs the basis of direct labor-hours. For the current year, Quark estimated that it would work 100,000 direct labor-hours and incur $20,000,000 of manufacturing overhead cost. The following summarized information relates to January of the current year. The raw materials purchased include both direct and indirect materials.
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Raw materials purchased on account
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$1,412,000
|
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Direct materials requisitioned into production
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$1,299,500
|
|
Indirect materials requisitioned into production
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$98,000
|
|
Direct labor cost (7,900 hours @ $40 per hour)
|
$316,000
|
|
Indirect labor cost (10,200 hours @ $16 per hour)
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$163,200
|
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Depreciation on the factory building
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$190,500
|
|
Depreciation on the factory equipment
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$890,700
|
|
Utilities for the factory
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$79,600
|
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Cost of jobs finished
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$2,494,200
|
|
Cost of jobs sold
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$2,380,000
|
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Sales (all on account)
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$3,570,000
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Required:
Prepare journal entries to record Quark's transactions for the month of January. Do not close out the manufacturing overhead account.