Reference no: EM13580138
Use information from Problem VI to prepare journal entries for the following events for the month of May. Remember that a journal entry must debit at least one account and credit at least one account. Please use proper account titles.
1. Raw materials purchased for cash.
2. Direct materials usage.
3. Indirect materials usage.
4. Factory payroll costs paid in cash.
5. Direct labor usage.
6. Indirect labor usage.
7. Factory overhead excluding indirect materials and indirect labor (record credit to Other Accounts).
8. Application of overhead to goods in process.
9. Allocation of over applied or under applied overhead to Cost of Goods Sold.
*Answer question VII only. Question VI is used for information only*
* VI. Cost flows in a job order cost system
The following information is available for Lock-Down Company, which produces special-order security products and uses a job order cost accounting system.
April 30 May 31
Inventories
Raw materials $40,000 $50,000
Goods in Process 9,600 19,500
Finished goods 60,000 33,200
Activities and information for May
Raw materials purchases (paid with cash) 189,000
Factory payroll (paid with cash) 400,000
Factory overhead
Indirect materials 12,000
Indirect labor 75,000
Other overhead costs 100,000
Sales (received in cash) 1,200,000
Predetermined overhead rate based on direct labor cost 65%
Complete the following amounts for the month of May.
1. Cost of direct materials used.
Beginning raw materials inventory 40,000
Plus purchases 189,000
Raw materials available 229,000
Less ending raw materials inventory (50,000)
Total raw materials used 179,000
Less indirect materials used (12,000)
Cost of direct materials used 167,000
2. Cost of direct labor used.
Total factory payroll 400,000
Less indirect labor (75,000)
Cost of direct labor used 325,000
3. Cost of goods manufactured.
Beginning goods in process inventory 9,600
Plus direct materials 167,000
Plus direct labor 325,000
Plus overhead applied (65% of DL cost) 211,250
Total cost of goods in process 713,120
Less ending goods in process inventory (19,500)
Cost of goods manufactured 693,620
4. Cost of goods sold.*
Beginning finished goods inventory 60,000
Plus: Cost of goods manufactured 693,620
Less ending finished goods inventory (33,200)
Cost of goods sold 720,420
5. Gross profit.
Sales 1,200,000
Cost of goods sold 720,420
Gross profit 479,580
6. Over applied or under applied overhead.
Factory overhead 720,420
*Do not consider any under applied or over applied overhead.