Question

Trump Corporation builds custom playgrounds for various customers including schools and municipal governments. The company uses a normal job costing system and has chosen direct labour hours as the application base when applying manufacturing overhead. At the beginning of 2020, upper-level management met and determined that the budgeted amount of MOH for the upcoming year was $1,729,000. They also estimated that the total number of direct labour hours that will be needed this year would be 133,000 hours. The following data relates to activities that occurred in the month of May:

1. A total of $450,000 of raw materials were purchased on account.
2. A total of $580,000 of raw materials were requisitioned from the purchasing department, 80% were used directly in production and the remainder were indirect materials.
3. Total labour hours worked for the month of May was 11,000 hours of which 80% were directly used in production, 15% were used indirectly in the production process and the remaining 5% were paid to administrative staff. All production staff are paid $15 per hour whereas administrative staff are paid $22 per hour.
4. MOH for the month was applied to production
5. Depreciation of $80,000 was recorded for the month, 75% of the depreciation was for factory equipment and the remaining 25% was for office equipment located in the accounting department.
6. Production orders costing $920,000 were completed during May and transferred to finished goods
7. Production orders that had cost $860,000 to manufacture were shipped to customers during the month of May. These goods were sold for 30% above cost. All sales are on account.

Required:

1. Prepare journal entries to record the above transactions

Answer 1