Question
1. The Premier Manufacturing Company uses a job order costing system. The following data relate to the month of May: a. Raw materials purchased with
1. The Premier Manufacturing Company uses a job order costing system. The following data
relate to the month of May:
a. Raw materials purchased with cash $80,000.
b. Direct materials issued to production, $79,000.
c. Indirect materials issued to production, $2,500.
d. Direct labor cost incurred, $61,000.
e. Additional actual manufacturing overhead costs totaled incurred $68,000 for the month
(credit Accounts Payable).
f. Overhead is applied on a basis of per machine-hour. Estimated total overhead is
$80,000, and estimated total machine hours is 40,000. In May, 25,000 machine hours
were recorded.
g. Depreciation expense for factory equipment is $2,000 and office furniture is $1,500.
h. Production orders costing $200,000 were completed during the month.
i. During the month, sales invoiced were $94,500. The company uses a 35% mark-up
above cost.
Required:
1. Prepare journal entries to record the information above.
2. Compute the ending balance of work in process. The beginning balance was $15,000.
3. Compute the over applied or under applied manufacturing overhead.
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