Question
Monaco Company accounts for the production of its product using a process cost system. Goods are started in Department A and processed through Department B
Monaco Company accounts for the production of its product using a process cost system. Goods are started in Department A and processed through Department B and completed in Department C. A separate Manufacturing Overhead account is maintained for each department. Overhead is applied to production in Department A at a rate equal to 150 percent of direct labor cost incurred in the department. Following are selected transactions for May 2017.
1. Materials purchased on account, $100,000.
2. Materials issued to Department A, $72,000, of which $12,000 is indirect.
3. Labor costs incurred in Department A, $120,000, of which $20,000 is indirect.
4. Manufacturing overhead incurred in Department A includes: depreciation, $20,000; utilities, $32,000; property taxes, $24,000; supervision, $52,000; all other (for cash), $24,000.
5. Overhead is applied to production in Department A at 150 percent of direct labor cost.
6. Completed production transferred out of Department A in May, $280,000.
Prepare the necessary journal entries.
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