Weber Company purchases $46,470 of raw materials on account, and it incurs $65,0

Question

Weber Company purchases $46,470 of raw materials on account, and it incurs $65,020 of factory labor costs. Supporting records show that (a) the Assembly Department used $26,240 of raw materials and $43,400 of the factory labor, and (b) the Finishing Department used the remainder. Manufacturing overhead is assigned to departments on the basis of 200% of labor costs.

Journalize the assignment of overhead to the Assembly and Finishing Departments. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

Date

Account Titles and Explanation

Debit

Credit

Mar.31

Explanation / Answer

First let us calculate the manufacturing overheads in each department. It is given manufacturing overheads are 200% of labor costs.

Factory labor costs in Assembly Department = $43,400. So Manufacturing Overhead = $43,400 * 200% = $86,800.

Total Factory labor costs = $65,020

Factory labor costs in Finishing Department = $65,020 - $43,400 = $ 21,620. So Manufacturing Overhead = $21,620 * 200% = $43,240.

Total Raw Materials = $46,470

Raw Materials in Finishing Department = $ 46,470 - $26,240 = $20,230

I will be showing here only assignment of overheads to each of the department. But to understand the flow of overheads at each stage and transferring them one department to another department, you should look into all the journal entries.

Journal Entries of Weber Company will be as follows:

Assembly Department

Date

Account Titles and Explanation

Debit

Credit

Mar.31

Raw Materials A/c                            Dr.

$26,240

To Accounts Payable A/c

$26,240

(Purchased Raw Materials on Account)

Mar.31

Wages A/c                                          Dr.

$43,400

To Cash A/c

$43,400

(Payment of Labor Costs)

Mar.31

Work-in-Process A/c                        Dr.

$86,800

To Manufacturing Overhead A/c

$86,800

(Assign Manufacturing Overhead)

Finishing Department

Date

Account Titles and Explanation

Debit

Credit

Mar.31

Raw Materials A/c                            Dr.

$20,230

To Accounts Payable A/c

$20,230

(Purchased Raw Materials on Account)

Mar.31

Wages A/c                                          Dr.

$21,620

To Cash A/c

$21,620

(Payment of Labor Costs)

Mar.31

Inventory A/c                                   Dr.

$43,240

To Manufacturing Overhead A/c

$43,240

(Assign Manufacturing Overhead)

It is assumed the product will be completed in the finishing department and manufacturing overhead is directly assigned to Inventory account instead of Work-in-Process account.

Date

Account Titles and Explanation

Debit

Credit

Mar.31

Raw Materials A/c                            Dr.

$26,240

To Accounts Payable A/c

$26,240

(Purchased Raw Materials on Account)

Mar.31

Wages A/c                                          Dr.

$43,400

To Cash A/c

$43,400

(Payment of Labor Costs)

Mar.31

Work-in-Process A/c                        Dr.

$86,800

To Manufacturing Overhead A/c

$86,800

(Assign Manufacturing Overhead)

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