Problem:
The decision was made to use a process costing system. The first month of operation went fairly smoothly, and the CFO is ready to prepare her journal entries, but asked for your help because she has not done this before for a manufacturing company.
Data for month ending 1/31/200X
Direct labor expended on jobs completed in month 1 $100,000
Direct material used up $500,000
Budgeted manufacturing overhead $2,000,000
Budgeted production volume 4,000 units
Actual production volume 4,500 units
Supplies, indirect labor, maintenance repair costs totaled $2,200,000
Beginning work in process inventory 0
Ending work in process inventory 0
Using only the data in the chart, prepare the proper journal entries—including a date and notes showing any calculation to record the following:
Labor
Direct material going into the work in progress (WIP) account
Manufacturing overhead all being credited to accounts payable