The following information is available for Lock-Tite Company, which produces spe

Question

The following information is available for Lock-Tite Company, which produces special-order security products and uses a job order costing system. April 30 May 31 Inventories Raw materials hork in process Finished goods $46,000 10,800 66,000 $58,000 22,500 41,600 Activities and information for May Raw materials purchases (paid with cash) Factory payroll (paid with cash) Factory overhead 216,000 357,000 Indirect materials Indirect labor Other overhead costs 21,000 86,000 126,000 1,460,000 Sales (received in cash) Predetermined overhead rate based on direct labor cost 758 Determine whether there is over or underapplied overhead. Factory Overhead Prepare the journal entry to allocate (close) overapplied or underapplied overhead to Cost of Goods Sold. View transaction list Journal entry worksheet Record entry to allocate (close) underapplied/overapplied overhead to cost of goods sold

Explanation / Answer

Actual Overheads incurred Indirect Material 21000 Indirect labor 86000 Other overheads cost 126000 Total OH incurred 233000 Less: OH applied 203250 (357000-86000)*75% Under-applied OH 29750 Journal entry: Cost of Goods sold Account Ddr. 29750      Factory overheads 29750

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