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Close manufacturing overhead, over under applied overhead

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The decision was made to use a process costing system. The first month of operation went fairly smoothly, and the CFO is ready to prepare her journal entries but asked for your help because she has not done this before for a manufacturing company.

Data for month ending 1/31/200X

Direct labor expended on jobs completed in month 1
$100,000

Direct material used up
$500,000

Budgeted manufacturing overhead
$2,000,000

Budgeted production volume
4,000 units

Actual production volume
4,500 units

Supplies, indirect labor, maintenance repair costs totaled
$2,200,000

Beginning work in process inventory
0

Ending work in process inventory
0

Using only the data in the chart, prepare the proper journal entries "including a date and notes showing any calculations" to record the following:

-Labor
-Direct material going into the work in progress (WIP) account
-Manufacturing overhead all being credited to accounts payable
Please add your file.

-Prepare the journal entries to record the closing-out of the balance in manufacturing overhead to the appropriate accounts, and show any necessary calculations in the notes of the journal entry.

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Solution Summary

Your tutorial is attached. Click in cells to see computations. Your tutorial shows you how to compute the overhead rate and compute the over or under applied overhead.

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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