uthon B: Production Journal Entries The COB Company completed the following tran

Question

uthon B: Production Journal Entries The COB Company completed the following transactions with respect to its manufacturing operations during March 2018. Prepare journal entries for each of the following transactions. 1. A total of $50,000 of direct materials was requisitioned to the factory for manufacturing operations during March. Manufacturing payroll for March consisted of 1,000 of direct labor hours at a rate of S20 per hour. 2. 3. Factory overhead cost was applied at the rate of 90% of direct labor cost. 4. Actual overhead for the month was $17,000. 5. Total manufacturing cost of $75,000 were completed and transferred to the finished goods warehouse. 6. Was overhead over-or-under applied, and by how much? 7. Prepare entry to dispose of the overhead variance to Cost of Goods Sold.

Explanation / Answer

Direct Material 50000 Direct Labor 20000 Factory OH 90% of DLC Applied FOH 18000 (90% of 20000) Actual FOH 17000 OverApplied OH 1000 (18000-17000) Journal Entry: Amount Dr. Amount Cr. 1 Work in Process Account Dr. 50000 To Material Account 50000 (Being Material Requisioned to Production) 2 Work in Process Account Dr. 20000 To Labor Account 20000 (Being Labor charged to Production) 3 Work in Process Account Dr. 18000 To Factory OH Account 18000 (Being FOH charged to Production) 4 Factory OH Account Dr. 17000 To Cash Account 17000 (Being Actual OH Recorded) 5 Finished Goods Account Dr. 75000 To WIP Account 75000 (Being Completed Jobs Transferred to FG) 6 Overhead were Overapplied by 1000/- 7 Factory OH Account Dr. 1000 To Cost of Goods Sold Account 1000 (Being Overapplied OH Charged to COGS)

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