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 issuance of materials to production is:
A) Debit Raw Materials Inventory $195,000; credit Accounts Payable $195,000.
B) Debit Raw Materials Inventory $195,000; credit Work in Process Inventory $195,000.
C) Debit Finished Goods Inventory $195,000; credit Raw Materials Inventory $195,000.
D) Debit Work in Process Inventory $165,000; debit Factory Overhead $30,000; credit Raw Materials Inventory $195,000.
E) Debit Work in Process Inventory $195,000; credit Raw Materials Inventory $195,000.

Question

Quizplus · Accepted Answer

The correct journal entry involves debiting Work in Process Inventory for the direct materials ($165,000) and Factory Overhead for the indirect materials ($30,000), and crediting Raw Materials Inventory for the total issued ($195,000).

Minstrel Manufacturing Uses a Job Order Costing System