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 products and uses a job order costing system. sec urity Exercise 19-7 Cost flows in a job order costing system P1 P2 P3 P April 30May 3I Inventories Raw materials Work in process 21,300 35,600 10,200 Finished goods. .63,000 Activities and information for May Raw materials purchases (paid with cash). Factory payroll (paid with cash) Factory overhead 210,000 345,000 15,000 80.000 120,000 1,400,000 Indirect labor Other overhead costs l... Sales (received in cash).. Predetermined overhead rate based on direct labor cost.......... 70% Compute the following amounts for the month of May. 1. Cost of direct materials used. 2. Cost of direct labor used. 3. Cost of goods manufactured 4. Cost of goods sold.* 5. Gross profit. 6. Overapplied or underapplied overhead Check (3) $625,400 Do not consider any underapplied or overapplied overhead Use information in Exercise 19-7 to prepare journal entries for the following events for the month of May. 1. Raw materials purchases for cash. 2. Direct materials usage. Exercise 19-8 Journal entries for 3. Indirect materials usage. materials P Use information in Exercise 19.7 to prepare journal entries for the following events for the month of May. Exerc 1. Direct labor usage. 2. Indirect labor usage. 3. Total payroll paid in cash. Journal entries for labor P2 ation in Exercise 19-7 to prepare journal entries for the following events for the month of May. Exercise 19-10 1. Incurred other overhead costs (record credit to Other Accounts). 2. Application of overhead to work in process. Journal entries for overhead P3

Explanation / Answer

Excercise 19-10:

Journal entries:

1) Dr. Factory overhead $120,000

Cr. Other accounts $120,000

2) Dr. Goods in process inventory $185,500

Cr. Factory overhead $185,500

Working:

Cost of direct labor used: Total factory payroll 345,000 - Indirect labor 80,000 = 265,000

Factory overhead 265,000 *70% = $185,500

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