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Michael Company uses job-order costing. The company has gathered the following data: Direct materials purchased for cash                   $60,000 Direct materials requisitioned                            $50,000 Direct...

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Accounting

Michael Company uses job-order costing. The company has gatheredthe following data:

Direct materials purchased forcash                  $60,000

Direct materialsrequisitioned                           $50,000

Direct labor costsincurred                                 $90,000

Factory overhead costsincurred                        $60,000

Cost of goodscompleted                                  $180,000

Cost of goodssold                                            $170,000

Sales forcash                                                   $300,000

Factory overheadapplied                                            ?

Factory overhead costs are applied at 90% of direct laborcosts.

Required:

  1. A) Prepare the required journal entries for the abovetransactions.
  2. B) Prepare the journal entry to dispose of the overheadvariance using the immediate write-off method.

Answer & Explanation Solved by verified expert
3.6 Ratings (323 Votes)

Journal entries

No Account and explanation debit credit
a Direct material 60000
Cash 60000
(To record direct material purchase)
b Work in process 50000
Direct material 50000
(To record direct material requisitioned)
c Work in process 90000
Wages payable 90000
(To record direct labor)
d Factory overhead 60000
Account payable 60000
(To record factory overhead)
e Finished goods 180000
work in process 180000
(To record cost of goods completed)
f Cost of goods sold 170000
Finished goods 170000
(To record cost of good sold)
g Cash 300000
Sales revenue 300000
(To record sales)
h Work in process (90000*90%) 81000
Manufacturing overhead 81000
(To record applied overhead)

b) Journal entry

Date account and explanation debit credit
Factory overhead (81000-60000) 21000
Cost of goods sold 21000
(To record over applied)

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