Minstrel Manufacturing uses a job order costing system.During one month,Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect.Minstrel incurred a factory payroll of $150,000,of which $40,000 was indirect labor.Minstrel uses a predetermined overhead rate of 150% of direct labor cost.
-The journal entry to record the factory payroll is:
A)Debit Work in Process Inventory $150,000; debit Factory Overhead $40,000; credit Factory Wages Payable $190,000.
B)Debit Work in Process Inventory $150,000; credit Cash $150,000.
C)Debit Work in Process Inventory $110,000; debit Factory Overhead $40,000; credit Factory Wages Payable $150,000.
D)Debit Work in Process Inventory $150,000; credit Factory Overhead $40,000; credit Factory Wages Payable $110,000.
E)Debit Work in Process Inventory $110,000; credit Factory Overhead $40,000; credit Factory Wages Payable $150,000.

Question

Quizplus · Accepted Answer

The correct journal entry to record the factory payroll includes debiting Work in Process Inventory for the direct labor cost ($150,000 total payroll - $40,000 indirect labor = $110,000 direct labor), debiting Factory Overhead for the indirect labor cost ($40,000), and crediting Factory Wages Payable for the total payroll cost ($150,000).

Minstrel Manufacturing Uses a Job Order Costing System