Durham Company uses a job-order costing system. The following transactions took place last year: raw materials requisitioned for use in production, $40,000 80% direct and 20% indirect. Factory utility costs incurred, $14,600. Depreciation on plan and equipment $28,000. Cost for Salaries and wages :
Direct labor $40,000, Indirect labor $18,000, Sales Commisions $10,000, administrative salaries $25,000, insurance $3,000 (80% relates to factory operaitons, and 20% relates to selling and administrative activities). Miscellaneous selling and administrative expenses $18,000. Manufacturing overhead was applied to production. The company applies overhead on the basis of 150% of direct labor cost. Goods that cost $130,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse. Goods that had cost $120,000 to manufacture according to their job cost sheets were sold for $200,000.
A tutorial showing how each of these would impact the accounts (using T accounts) and the multi-step income statement, gives you a template to study and use for other problems.