Problem 1

Rawr is a manufacturer of dehydrated cat treats located in Oakland, CA. The company has two production processes: Dehydrating and Packaging. October 1 inventory balances are as follows: Raw Materials $800; Work in Process -Dehydrating $200; Work in Process -Packaging $300; and Finished Goods $500. The company incurs $5,000 of factory labor costs and incurs overhead costs of $1,800 during the month. The Dehydrating department requisitioned $400 of materials and the Packaging department requisition $100 of materials in the month. Time tickets indicate that the Dehydrating department used 60% of the total labor costs. Manufacturing overhead is assigned to departments on the basis of 40% of labor costs.

Requirement 1: Prepare the journal entry to assign the material costs for both departments.

Date Accounts & Explanations Debit Credit

Oct. 31

Requirement 2: Prepare the journal entry to assign the factory labor costs for both departments.

Date Accounts & Explanations Debit Credit

Oct. 31

Requirement 3: Prepare the journal entry to assign the overhead costs for both departments.

Date Accounts & Explanations Debit Credit

Oct. 31

Requirement 4: Is the companys overhead over or under applied for the period? Explain.