IThe following information applies to the questions displayed below The followin

Question

IThe following information applies to the questions displayed below The following information ts available for Lock-Tite Company, which produces special-order security products and uses a job order costing system April 30 May 31 Inventorles Raw materials Work In process Finished goods $48,000 $ 59,000 8,400 62,000 33,200 9,800 Activities and information for May Raw materials purchases (paid with cash) Factory payroll (paid with cash) Fectory overhead 176,000 150,000 Indirect matertals Indirect labor Other overhead costs 8,000 80,000 104,500 1.400,000 Sales (recelved in cash) Predetermined overhead rate based on direct labor cost 55%

Explanation / Answer

Lock-tite Company Details Amt $ Cost Of Direct Material Used Opening Inventory May 1.            48,000.00 Add Purchases in May            176,000.00 Less Closing Inventory May 31          (59,000.00)              1.00 Cost Of Direct Material Used          165,000.00              2.00 Cost of Direct Labor Used =          150,000.00              3.00 Manufacturing Overhead @55% of direct labor cost            82,500.00 Total Manufacturing Cost=1+2+3=          397,500.00 Opening WIP Inventory May 1.               9,800.00 Less Closing WIP Inventory May 31          (18,400.00) Cost of Goods Manufactured          388,900.00 Opening FG Inventory May 1.            62,000.00 Less Closing FG Inventory May 31          (33,200.00)              4.00 Cost Of Goods Sold          417,700.00 Lock-tite Company Income statement -Partial Details Amt $ Sales Revenue      1,400,000.00 Les Cost of Goods sold          417,700.00              5.00 Gross Profit          982,300.00 Manufacturing Overheads Incurred Amt $ Indirect Materials               8,000.00 Indirect Labor            80,000.00 Other overheads          104,500.00 Total            192,500.00 Overhead applied            82,500.00              6.00 Underapplied Overhead          110,000.00 Journal Entries a Account title Dr $ Cr $ Inventory -Raw materials          176,000.00 Cash 176,000.00 (Raw material purchase) b WIP            165,000.00 Inventory -Raw materials 165,000.00 ( Direct material usage) c Inventory-Indirect materials        8,000.00 Manufacturing Overhead A/C               8,000.00 (Indirect material usage ) d WIP            150,000.00 Wages Payable 150,000.00 ( Direct labor usage) e Manufacturing Overhead A/C            80,000.00 Wages Payable      80,000.00 ( Indirect labor usage) f Wages Payable          230,000.00 Cash 230,000.00 (Payroll payment)              1.00 Other Overhead Expense A/C 104,500.00 Manufacturing Overhead A/C          104,500.00 (Other overhead accounting)              2.00 Manufacturing Overhead A/C      82,500.00 WIP            82,500.00 (application of overhead to WIP) Manufacturing Overhead A/C 110,000.00 Cost Of Goods sold          110,000.00 ( Underapplied Overhead adjusted )

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