Question

A	We buy $100,000 of raw materials.
B	We requisition $95,000 of those materials into production.
C	Direct labor costs are $50,000
D	Manufacturing overhead is allocated at a rate of $2 per $1 of direct material use.
E	$150,000 of work in process is finished by the end of the month.
F	Actual overhead spending came to $205,000 this month.
1	Journalize the above transactions.
2	What is the ending value in work in process?
3	Is MOH under- or over-allocated for this period, and by how much?

Answer 1

1.)	S.No.	Account Titles	Debit $	Credit $
	A	Raw Material Inventory	100,000
		Cash / Accounts Payable		100,000
	B	Work In process Inventory	95,000
		Raw Material Inventory		95,000
	C	Work In process Inventory	50,000
		Cash/Wages payable		50,000
	D	Work In process Inventory	190,000
		Manufacturing Overhead		190,000
		( 95,000 x 2 )
	E	Finished Goods Inventory	150,000
		Work In process Inventory		150,000
	F	Manufacturing Overhead	205,000
		Cash/Accounts Payable		205,000

2.)	Ending value in Work in process	$185,000	(95,000 + 50,000 + 190,000 - 150,000 )
3.)	Actual Manufacturing Overhead	205,000
	Less: Allocated Overhead	190,000
	Under allocated overhead	$ 15,000