Question

Millennium Corporation uses a predetermined overhead rate of 150% of direct labor cost. Required: Prepare journal entries for the following transactions and events:

(1) Assignment of materials costs to Goods in Process Inventory and Factory Overhead.(4 marks)

(2) Assignment of Factory Payroll to Goods in Process Inventory and Factory Overhead.(4 marks)

(3) Assignment of Factory Overhead to Goods in Process Inventory.(2 marks)

(4) Transfer of goods completed to Finished Goods Inventory.(2 marks)

(5)Compute the actual factory overhead, and then prepare the adjusting entry to allocate any overor underapplied overhead, assuming the amount is not material.(2 marks)

$ 19,400- Ending raw materials inventory- Depreciation of factory equipment Drect labor Finished goods-beginning year Factory utilities Ending goods in process Indirect labor Raw materials inventory-beginning year Raw materials purchased Beginning goods in process Indirect materials ρ Marketing expenses» Factory rent- 45,000* 64,600 » 45,000* 3,000» 5,000» 8,400 24,200» 116,200. 95,000. 7,000 8,000 31,600.

Answer 1

1)	Goods in process inventory	114000
	Factory overhead	7000
	Raw materials inventory
	(To record raw materials used)
	CALCULATION FOR DIRECT MATERIALS USED:
	Raw materials inventory-beginning year	24200
	Raw materials purchased	116200
	Total raw materials available	140400
	Less: Indirect materials used	7000
	Less: Ending raw materials inventory	19400
	Direct materials used	114000
2)	Goods in process inventory	64600
	Factory overhead	8400
	Factory payroll		73000
	(To record labor costs)
3)	Goods in process inventory (64600*150%)	96900
	Factory overhead		96900
	(To record assignment of factory overhead)
4)	Finished goods inventory	365500
	Goods in process inventory		365500
	(To record completion and transfer of goods completed)
	CALCULATION FOR FINISHED GOODS TRANSFERRED:
	Beginning goods in process	95000
	Add: Costs incurred during the period (114000+64600+96900)	275500
	Total manufacturing costs	370500
	Less: Ending goods in process	5000
	Cost of goods produced	365500
5)	Factory overhead	1900
	Cost of goods sold		1900
	(To transfer overapplied OH to Cost of goods sold)
	CALCULATION OF OVERHEAD UNDER/OVERAPPLIED:
	Actual overhead:
	Depreciation of factory equipment	45000
	Factory utilities	3000
	Indirect labor	8400
	Indirect material	7000
	Factory rent	31600
	Actual factory overhead	95000
	Overhead applied	96900
	Overhead overapplied	1900