Montgomery, Inc., which uses a job-costing system, is a labor-intensive firm, with many skilled craftspeople on the payroll. Job no. 789 was the only job in process on January 1, having costs of $22,500 as of that date. Direct materials used and direct la

Montgomery, Inc., which uses a job-costing system, is a labor-intensive firm, with many skilled craftspeople on the payroll. Job no. 789 was the only job in process on January 1, having costs of $22,500 as of that date. Direct materials used and direct labor incurred during January were:          

Job No.
Direct Materials
Direct Labor

Job no. 789
$ 2,000
$ 6,000

Job no. 790
9,000
10,000

Job no. 791
14,000
8,000



          Job no. 791 was the only job in production as of January 31.          

          Required:

Should Montgomery use direct labor or machine hours as a cost driver? Why?
Assume that the company decided to use direct labor as its cost driver. If the budgeted amount of direct labor and manufacturing overhead are anticipated to be $200,000 and $300,000, respectively, what is the firm's predetermined overhead rate?
Compute the cost of work-in-process inventory as of January 31.
Compute the cost of jobs completed during January.
Suppose that the company sold all of its completed jobs, adding a 40% markup to cost. How much would the firm report as (1) cost of good sold and (2) sales revenue?