Prepare the appropriate journal entries or calculations in good form using an excel spreadsheet.

Ahmed Company is a manufacturing firm that uses job-order costing. At the beginning of the year, the company’s inventory balances were as follows:

Raw materials………….. $250,000

Work in process………… 200,000

Finished goods…………. 510,000

The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 15,000 machine-hours and incur $450,000 in manufacturing overhead cost. The following transactions were recorded for the year:

  1. Raw materials were purchased on account for $100,000.
  2. Raw materials were requisitioned for use in production, $200,000 of which 75% were direct materials and the remainder was indirect materials.
  3. Employee costs were incurred: direct labor, $450,000; indirect factory labor, $250,000; and general and administrative salaries, $291,000.
  4. Advertising costs of $125,000 were incurred.
  5. Utility costs of $39,000 were incurred for the factory and $61,000 were for the headquarters building.
  6. Depreciation for the year was $300,000 of which $175,000 is related to the factory and $125,000 is related to the headquarters office building.
  7. Manufacturing overhead was applied to jobs. The actual level of machine hours for the year was 17,000 machine-hours.
  8. The goods with direct material costs of $100,000, direct labor costs of $159,000 and manufacturing overhead cost of $200,000 were completed and moved to the delivery area.
  9. Goods with a cost of $500,000 were sold on account for 175% of cost.
  10. The over or under applied overhead journal entry must be made. (Be sure to indicate if overhead is over or under applied.)


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