Question

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 2017: B (Click the icon to view the data.) Read the requirements. Requirement 1. Identify the components of the overview diagram of the job-costing system at the University of Chicago Press. o} Direct Costs LLUI "}À À - Direct Manufacturing Labor -

Answer 1

1.

A	Indirect cost pool
B	Manufacturing overhead
C	Cost allocation base
D	Direct manufacturing labor costs
E	Cost object
F	Indirect costs/Allocated manufacturing overhead costs
G	Direct costs
H	Direct costs
I	Direct materials
J	Direct manufacturing labor

2.

No	Account Titles	Debit	Credit
1	Materials control	810
	Accounts payable/Cash		810
2	Work in process control	710
	Materials control		710
3	Manufacturing overhead control	130
	Materials control		130
4	Work in process control	1300
	Factory payroll/Cash		1300
5	Manufacturing overhead control	930
	Factory payroll/Cash		930
6	Manufacturing overhead control	410
	Accumulated depreciation		410
7	Manufacturing overhead control	520
	Cash/Accounts payable		520
8	Work in process control	2210
	Manufacturing overhead allocated (170% x $1300)		2210
9	Finished goods control	4100
	Work in process control		4100
10	Cash/Accounts receivable	8000
	Sales revenue		8000
11	Cost of goods sold	4060
	Finished goods control		4060
12	Manufacturing overhead control ($2210 - $1990)	220
	Cost of goods sold		220

Note: The transactions have been recorded and numbered in the order given in the question.

3.

Materials Control
Beg. Bal.	130
1	810	710	2
		130	3
Work in Process Control
Beg. Bal.	75
2	710	4100	9
4	1300
8	2210
Finished Goods Control
Beg. Bal.	570
9	4100	4060	11
Cost of Goods Sold
11	4060	220	12
Manufacturing Overhead Control
3	130
5	930
6	410
7	520
12	220
Manufacturing Overhead Allocated
		2210	8

4. Gross profit = Sales revenue - Adjusted cost of goods sold = $8000 - ($4060 - $220) = $8000 - $3840 = $4160

The University of Chicago Press performed well in 2017 as it had a gross profit of $4160