The University of Chicago 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 2014:
Direct materials and supplies purchased on credit $800
Direct materials used 710
Indirect materials issued to various production departments 100
Direct manufacturing labor 1,300
Indirect manufacturing labor incurred by various production departments 900
Depreciation on building and manufacturing equipment 400
Miscellaneous manufacturing overhead* incurred by various production 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 4,120
Revenues 8,000
Cost of goods sold (before adjustment for under- or overallocated manufacturing overhead) 4,020
Inventories, December 31, 2013 (not 2014):
Materials Control 100
Work- in- Process Control 60
Finished Goods Control 500
1. Prepare an overview diagram of the job-costing system at the University of Chicago Press.
2. Prepare journal entries to summarize the 2014 transactions. As your final entry, dispose of the year-end under- or overallocated manufacturing overhead as a writeoff to Cost of Goods Sold. Number your entries. Explanations for each entry may be omitted.
3. Show posted T-accounts for all inventories, Cost of Goods Sold, Manufacturing Overhead Control, and Manufacturing Overhead Allocated.
4. How did the University of Chicago Press perform in 2014?