ezto mheducation.com/hm.tpx Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages commissions on their sales. All of the company’s transactions are conducted in cash; there is no credit through an extensive network of street vendors who receive with customers, employees, and suppliers The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $105,000 of manufacturing overhead for an estimated activity level of $50,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows: Raw materials Work in process Finished goods $ 11,000 $ 5,000 S 8,800 During the year, the following transactions were completed: a. Raw materials purchased for cash, $163,000 b. Raw materials requisitioned for use in production, $150.000 (materials costing $127,000 were charged directly to jobs; the remaining materials were indirect) Costs for employee services were incurred as follows: c. Direct labor Indirect labor Sales commissions S 164,000 s 262,200 S 22,000 S 45,000 d Rent for the year was $18,200 ($13.400 of this amount related to factory operations and the remainder related to selling and administrative activities) Utility costs incurred in the factory. $15.000
