You have a business manufacturing man buns for depilous hipster wannabes. You pr

Question

You have a business manufacturing man buns for depilous hipster wannabes. You produce these man-buns (MB) in batches of 100. Each MB hs the following manufacturing standards

Direct materials 2 locks of hair $10.00 per lock

Direct labor 1.5DLH $15.00 per DLH

Indirect materials $300 per batch

other indirect manufacturing costs $5000 per month

Normal output 10 batches per month

total capacity 11 batches per month

There is no beginning or ending inventory for WIP and Finished Goods

During april 2016 you made 11 batches of MB's and spend/incurred the following:

Locks of hair 2310 locks $22,638 in total

direct labor 1600 DLH $24,400 in total

Variable OH(Indirect materials) $3150 in total

Fixed O/H(other indirect mfg costs) $5220 in total

1. record journal entries to record the use of direct materials, direct labor, and variable and fixed manufacturing overhead. post costs to WIP first, then transfer all of WIP to Finished Goods to COGS- remember there is no beginning or ending inventory for WIP or Finished Goods.

Explanation / Answer

WE Journalise as follows

Date Particulars Debit Credit 1 Raw Material Inventory 25788                  Account Payable 25788 ( direct and indirect material purchased) 2 Work in Process inventory 24400                  Wages Payable 24400 ( direct labor incurred on manufacturing) 3 Factory Overheads 5220                    Cash 5220 ( Fixed manufacturing overheads incurred) 4 Work in process inventory 22638                  Raw material inventory 22638 ( Trf. Of direct material to WIP) 5 Factory overhead 3150                  Raw material inventory 3150 (Trf. Of Indirect material to overhead) 6 Work in Process inventory 8300        Factory Overheads 8300 ( Absorbed at pre detrermined rate) Variable 11 batches x 300 per batch = 3300 Add: Fixed manufacturing = 5000 Total= 8300 7 Finished Goods 55338           Work In process Inventory 55338 ( Trf. Of wIP to FG) 8 Cost Of Goods Sold 55338                 Finished Goods 55338 ( Trf. Of FG to COGS) 9 Cost Of Goods Sold 70       Factory Overheads 70 ( over absorbtion of Variable overhead = 150 Under Absorbtion of Fixed overhead = 220, Net 70 Under Absorbtion)

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