A Company That Uses a Job Order Costing System Incurred

question 145

Essay

A company that uses a job order costing system incurred $10,000 of factory payroll during May. Present the May 31 entry assuming $8,000 is direct labor and $2,000 is indirect labor.

---

Definitions:

Production

The process of creating goods and services through the combination of labor, materials, and technology.

Manufacturing Overhead

All indirect costs associated with the production process, excluding direct materials and direct labor costs.

Budgeted Fixed

Refers to the portion of a budget that represents fixed costs, which do not change with the level of activity within a certain range.

Manufacturing Overhead Applied

The portion of production overhead costs assigned to each unit of product based on a predetermined overhead rate, including indirect costs like utilities and rent.