Swifty Company purchases $50,100 of raw materials on account, and it incurs $62,800 of factory labor costs. Supporting records show that (a) the Assembly Department used $33,500 of the raw materials and $44,400 of the factory labor, and (b) the Finishing Department used the remainder. Manufacturing overhead is assigned to departments on the basis of 160% of labor costs.

Solution and explanantion

To record the assignment of overhead to the assembly and finishing department, debit the work in process assembly department, debit the work in process finishing department and credit manufacturing overhead as below:

dateParticulars                                                DebitCredit

Work in process – assembly department71040  

Work in process – finishing department29440  

Manufacturing department                                             100480  

Working note:

Labor cost assigned to assembly = $44400

Labor cost assigned to finishing = $62800 minus 44400 = $18400

Manufacturing overhead assigned to assembly =

Manufacturing overhead assigned to fiishing =

in terms of experimental research, mcdonald’s charging different prices in the two cities relates to