The gross earnings of factory workers for Javelin Manufacturing Company during t
ID: 2448124 • Letter: T
Question
The gross earnings of factory workers for Javelin Manufacturing Company during the month of January are $300,000. The employer's payroll taxes for the factory payroll are $36,000. Of the total accumulated cost of factory labor, 75% is related to direct labor and 25% is attributable to indirect labor.
Instructions
(a) Prepare the entry to record the factory labor costs for the month of January.
(b) Prepare the entry to assign factory labor to production.
(c) Prepare the entry to assign manufacturing overhead to production, assuming the predetermined overhead rate is 125% of direct labor cost.
Explanation / Answer
a) Factory labor Dr. $336000
Factory wages payable Cr. $30000
Employer payroll taxes payable Cr. $36000
b) Work in Process Inventory Dr. $252000
Manufacturing Overhead Dr. $84,000
Factory Labor Cr. $336,000
($336000*75% = 252000, $336000*25% =84000)
c) Work in process inventory Dr. $315000
Manufacturing Overhead Cr. $315000
($252000*125% = 315000)
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