Jordan Industries is a manufacturing company that produces solid oak office furniture. During the year, the following costs were incurred. The building depreciation and the utilities are allocated three fourths to production and one fourth to administration. The cost of furniture parts can be traced to specific production runs.
Oak wood. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $90,000
Miscellaneous supplies (glue, saw blades, varnish, etc.) . . . . . . . . . . . . . . . . . . . . . . . . 2,500
Furniture parts (wheels, locks, etc.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,500
Payroll—plant manager’s salary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Payroll—administrative salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000
Payroll—production line employees’ wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,500
Building depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000
Maintenance—plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000
Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
1. Classify the costs into the following four categories: direct materials, direct labor, manufacturing overhead, and period costs.
2. Calculate the total amount of cost for each category.
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