Minstrel Manufacturing uses a job order costing system. Duringone month Minstrel purchased $198,000 of raw...

Minstrel Manufacturing uses a job order costing system. During one month Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead rate of 150% of direct labor cost. The journal entry to record the application of factory overhead to production is:

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Journal : Debit Work in Process Inventory $165,000; credit Factory Overhead $165,000.

Workings:

Direct labor = Total labor cost - Indirect labor = 150,000 - 40,000 =110,000

Applied factory overhead = 110,000 * 150% = 165,000

Journal entry

Account Titles	Debit	Credit
Work in Process Inventory	165000
Factory Overhead		165000

ekkarill92 answered 2 years ago

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