Exercise 15-13 Adjusting factory overhead LO P4
The following information is available for Lock-Tite Company,which produces special-order security products and uses a job ordercosting system.
| April 30 | | May 31 | |
| Inventories | | | | | | | |
| Raw materials | $ | 43,500 | | | $ | 53,000 | |
| Work in process | | 10,300 | | | | 21,500 | |
| Finished goods | | 63,500 | | | | 36,600 | |
| Activities and information for May | | | | | | | |
| Raw materials purchases (paid with cash) | | | | | | 211,000 | |
| Factory payroll (paid with cash) | | | | | | 347,000 | |
| Factory overhead | | | | | | | |
| Indirect materials | | | | | | 16,000 | |
| Indirect labor | | | | | | 81,000 | |
| Other overhead costs | | | | | | 121,000 | |
| Sales (received in cash) | | | | | | 1,410,000 | |
| Predetermined overhead rate based on direct labor cost | | | | | | 75 | % |
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Determine whether there is over or underapplied overhead.
Prepare the journal entry to allocate (close) overapplied orunderapplied overhead to Cost of Goods Sold.
- Materials purchases (on credit).
- Direct materials used in production.
- Direct labor paid and assigned to Work in ProcessInventory.
- Indirect labor paid and assigned to Factory Overhead.
- Overhead costs applied to Work in Process Inventory.
- Actual overhead costs incurred, including indirect materials.(Factory rent and utilities are paid in cash.)
- Transfer of Jobs 306 and 307 to Finished Goods Inventory.
- Cost of goods sold for Job 306.
- Revenue from the sale of Job 306.
- Assignment of any underapplied or overapplied overhead to theCost of Goods Sold account. (The amount is not material.)
2. Prepare journal entries for the month of Aprilto record the above transactions.
