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Horton Company uses a job costing system, and manufacturing overhead is applied on thebasis of machine hours.
Horton Company uses a job costing system, and manufacturing overhead is applied on thebasis of machine hours. At the beginning of the year, management estimated that the company would incur $1,050,000 of manufacturing overhead costs and use 70,000 machinehours.
Horton Company recorded the following events during the month of March.
- (a) Beginning balances:
- Raw materials inventory (RM): $100,000 Work in process inventory (WIP): $150,000 Finished goods inventory (FGs): $30,000
- (b) Purchased 200,000 kilograms of raw materials on account. The cost was $4.00 perkilogram.
(c) Issued 150,000 kilograms of materials to production. Assume all materials issued are at $4 per kilogram.
(d) Incurred $250,000 of direct labour costs and $50,000 of indirect labour costs.
(e) Recorded depreciation on equipment for the month, $18,000.
(f) Recorded $42,000 of insurance costs for the manufacturing property.
(g) Recorded $35,000 for utilities and other miscellaneous items for the manufacturing plant.
(h) Completed job Ml 1 costing $170,000 and job M12 costing $800,000 during the monthand transferred them to Finished Goods inventory account.
(i) Shipped job M12 to the customer during the month. (j) Used 10,000 machine hours during March.
