### Oberti Guitar Company: Job Order Costing System AnalysisOberti Guitar Company specializes in producing high-quality customized guitars and adopts a job order costing system due to the handmade nature of its products. In this system, overhead is applied based on direct labor hours. At the onset of the year, it was forecasted that total manufacturing overhead would be $300,000, with 20,000 direct labor hours being utilized. Below is a summary of the company's operations provided by Anthony, the founder and CEO, for the year-end analysis:1. **Beginning Inventory Balances:** - **Raw Materials Inventory:** $8,000 - **Work in Process Inventory:** $26,000 - **Finished Goods Inventory:** $32,0002. **Raw Material Purchases:** - The company purchased raw materials costing $97,000 during the year, with all acquisitions made on account.3. **Material Requisitions:** - The production department requisitioned $100,000 in raw materials for production. Out of these, 70% were direct materials, and 30% were indirect materials.4. **Direct Labor:** - A total of 21,000 direct labor hours were utilized during the year, at a rate of $14 per hour (credited to Wages Payable).5. **Indirect Labor:** - The company used 6,500 indirect labor hours at a rate of $10 per hour (credited to Wages Payable).6. **Factory Overhead Costs:** - Expenses for insurance, utilities, and property taxes on the factory amounted to $178,000.7. **Factory Depreciation:** - Depreciation on factory equipment was recorded at $40,000.8. **Application of Manufacturing Overhead:** - Manufacturing overhead was applied to inventory based on the 21,000 direct labor hours actually worked during the year.9. **Completion of Products:** - Products costing $665,000 were completed during the year and transferred to the Finished Goods Inventory.10. **Sales:** - The company sold products totaling $672,000 throughout the year.11. **Closing of Overhead Accounts:** - The company adjusted the Cost of Goods Sold to account for any under- or overapplied overhead.This detailed breakdown provides a comprehensive understanding of the operational costs and resource allocation within the company, crucial ### Payroll and Manufacturing Overhead AccountingIn accounting, it is important to systematically record various types of labor and overhead expenses. Below is a guide on how to record direct labor payroll, indirect labor payroll, and other manufacturing overhead incurred.1. **Direct Labor Payroll** - This section captures the payroll related to direct labor. Direct labor refers to the workforce directly involved in the manufacturing or production of goods. 2. **Indirect Labor Payroll** - This segment records payroll related to indirect labor. Indirect labor includes employees who are not directly involved in the production process but whose work supports production activities, such as maintenance staff and supervisors. 3. **Other Manufacturing Overhead** - This area accounts for other ongoing costs not directly tied to specific units of production, such as factory rent, utilities, and equipment depreciation.#### Example Entries:```4. [Account Title] [Debit Amount] [Account Title] [Credit Amount](To record direct labor payroll)``````5. [Account Title] [Debit Amount] [Account Title] [Credit Amount](To record indirect labor payroll)``````6. [Account Title] [Debit Amount] [Account Title] [Credit Amount](To record other manufacturing overhead incurred)```### Explanation of Entries:1. **Direct Labor Payroll (Entry #4)**: - Debit the direct labor expense account to increase it. - Credit the cash or payable account to reflect the payment obligations.2. **Indirect Labor Payroll (Entry #5)**: - Debit the indirect labor expense account to increase it. - Credit the cash or payable account to recognize the payment obligations.3. **Other Manufacturing Overhead (Entry #6)**: - Debit the various overhead expense accounts to increase them. - Credit the cash or payable account to acknowledge the payment obligations.By accurately recording these expenses, businesses ensure precise product costing and effective financial management.

Name: ### Oberti Guitar Company: Job Order Costing System AnalysisOberti Gu
Uploaded: 2024-03-20T06:32:49.000Z
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Description: ### Oberti Guitar Company: Job Order Costing System AnalysisOberti Guitar Company specializes in producing high-quality customized guitars and adopts a job order costing system due to the handmade nature of its products. In this system, overhead is