Chapter 3.A, Problem 4P

A Transaction Analysis L03-5
Morrison Company uses a job-order costing system to assign manufacturing costs to jobs its balance sheet on January 1 is as follows

During January the completed the transactions:

a. Purchased raw materials on account, $74.000.
b. Raw materials used in production. $74,000 ($67,000 was direct materials and $7000 was indirect materials).
c. Paid $67,000 of salaries and wages in cash ($95,000 was direct labor, $35,000 was indirect labor, and $37,000 was related to responsible for selling and administration)
d. Various manufacturing overhead costs incurred (on account) to support $33,000.
e. Depreciation recorded on property, plant, and equipment, S90, 000 (70% related to manufacturing equipment and related to assets that support selling and administration).
f. Various selling expenses paid in cash, $27,000.
g. Prepaid insurance expired dating the month, $1,200 (80% related to production, and related to selling and administration) h. Manufacturing overhead applied to productive $132,000.
I. Cost of goods manufactured $288,000.
j. Cash Saks to Customers. $395,000.
k. Cost Of goods sold (unadjusted), $285,000.
l. Cash payments to $62,000.
m. under applied or over applied overhead $?

Required:
l. Calculate the ending balances that would be reported on the company’s balance sheet on January 31.You can derive your answersusing Microsoft Excel and Exhibit 3A-2 as guide, or you can use paper: pencil and a calculator (Hint: Be sure to calculate the under applied or over applied overhead and then account for its effect on the balance sheet)
2. What is Morrison Company’s net operating income for the month of January?