The gross earnings of factory workers for Dinkel Company during the month of Jan

Question

The gross earnings of factory workers for Dinkel Company during the month of January are $400,000. The employer's payroll taxes for the factory are $180,000. Of the total accumulated cost of factory labor 75% is related to direct labor and 25% is attributable to indirect labor.
Show work (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% attributed to direct labor costs. The gross earnings of factory workers for Dinkel Company during the month of January are $400,000. The employer's payroll taxes for the factory are $180,000. Of the total accumulated cost of factory labor 75% is related to direct labor and 25% is attributable to indirect labor.
Show work (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% attributed to direct labor costs.
Show work (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% attributed to direct labor costs.

Explanation / Answer

Factory labour                                                 Dr   580000

                   To, Factory wages payable account                    400000

                   To, Employer payroll tax payable account         180000

Work in progress inventory Dr435000

Manufacturing overhead accountDr 145000

To, Factory labour580000

(580000*75% = 435000)

Work in progress inventory Dr543750

To, Manufacturing overhead account543750

(435000*125% = 543750)

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