Cost Accounting


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


Direct material used up


Budgeted manufacturing overhead


Budgeted production volume

4,000 units

Actual production volume

4,500 units

Supplies, indirect labor, maintenance repair costs totaled


Beginning work in process inventory


Ending work in process inventory


Individual Portion:

Using only the data in the chart, prepare the proper journal entries—including a date and notes showing any calculations—to record the following:

  • Labor
  • Direct material going into the work in progress (WIP) account
  • Manufacturing overhead all being credited to accounts payable



Part 2

You, the CFO, and the rest of the accounting department now need to write a memo summarizing the data from the first month of using the process costing system operation.

Using only the data above, prepare a 300–400-word memo addressing all of these questions and showing all calculations:

  • Prepare the journal entries to record the closing-out of the balance in manufacturing overhead to the appropriate accounts, and show any necessary calculations in the notes of the journal entry. 
    • 6 years ago
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