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Business: Process Costing System

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 calculation to record the following:
Direct material going into the work in progress (WIP) account
Manufacturing overhead all being credited to accounts payable

Solution Summary

This solution illustrates how to make process cost accounting journal entries.