Question

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:

Answer 1

Step-by-step explanation:

For computing the factory overhead, firstly we have to calculate the direct labor cost because the factory overhead is 150% of direct labor cost

So, direct labor cost = Factory Payroll - Indirect cost

= $150,000 - $40,000

= $110,000

And, Factory overhead = 150% × Direct labor cost

= $165,000

Hence, The journal entry is shown below:

Work in Progess A/c Dr

To Factory Overhead

(Being factory overhead is recorded)