Answer the following questions using the information below:
Lehman Pottery Company manufactures clay molded pottery on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production.
Data for the Assembly Department for August 2008 are:
Costs for August:

-Which of the following journal entries records the Assembly Department's conversion costs for the month, assuming conversion costs are 10% higher than expected?

Question

Answer the following questions using the information below:
Lehman Pottery Company manufactures clay molded pottery on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production.
Data for the Assembly Department for August 2008 are:
    Costs for August:
  
-Which of the following journal entries records the Assembly Department's conversion costs for the month, assuming conversion costs are 10% higher than expected?

Quizplus · Accepted Answer

The journal entry for recording the Assembly Department's conversion costs for the month can be calculated as follows:
Conversion costs = Total manufacturing costs - Direct materials cost
Expected conversion costs = $8,000 - $2,000 (direct materials) = $6,000
10% higher than expected conversion costs = $6,600
Therefore, the journal entry should be:
Debit Work in Process Inventory- Assembly Department: $6,600
Credit Manufacturing Overhead: $6,600
Option C correctly records the conversion costs with a 10% increase in manufacturing overhead.

Answer the Following Questions Using the Information Below