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Job order costing

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P3-3A Fiedel Company manufactures its product, Vitadrink, through two manufacturing processes: Mixing and Packaging. All materials are entered at the beginning of each process. On October 1, 2008, inventories consisted of Raw Materials $26,000, Work in Process-Mixing $0, Work in Process-Packaging $250,000, and Finished Goods $289,000. The beginning inventory for Packaging consisted of 10,000 units that were 50% complete as to conversion costs and fully complete as to materials. During October, 50,000 units were started into production in the Mixing Department and the following transactions were completed.
1. Purchased $300,000 of raw materials on account.

2. Issued raw materials for production: Mixing $210,000 and Packaging $45,000.

3. Incurred labor costs of $248,900.

4. Used factory labor: Mixing $182,500 and Packaging $66,400.

5. Incurred $790,000 of manufacturing overhead on account.

6. Applied manufacturing overhead on the basis of $22 per machine hour. Machine hours were 28,000 in Mixing and 6,000 in Packaging.

7. Transferred 45,000 units from Mixing to Packaging at a cost of $979,000.

8. Transferred 53,000 units from Packaging to Finished Goods at a cost of $1,315,000.

9. Sold goods costing $1,604,000 for $2,500,000 on account.

Journalize transactions.

Journalize the October transactions.

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Solution Preview

1. Purchased $300,000 of raw materials on account.

The journal entry is
Raw Material Inventory Dr 300,000
Accounts Payable Cr 300,000

2. Issued raw materials for production: Mixing $210,000 and Packaging $45,000.

When material is issued for production it is debited to work in process. In process costing each department has its own work in process account. The journal entry is
Work in Process - Mixing Dr 210,000
Work in Process - Packaging Dr 45,000
Raw Material Inventory Cr 255,000

3. Incurred labor costs of $248,900.

When labor costs are incurred, these are recorded as ...

Solution Summary

The solution explains the journal entries in a job order costing system