Question

4.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$43,000 $52,000 Work in process 10,200 21,300 Finished goods 63,000 35,600 Activities and information for May Raw materials purchases (paid with cash) 210,000 Factory payroll (paid with cash) 345,000 Factory overhead Indirect materials 15,000 Indirect labor 80,000 Other overhead costs 120,000 Sales (received in cash) 1,400,000 Predetermined overhead rate based on direct labor cost 70% Determine whether there is over or underapplied overhead. Prepare the journal entry to allocate (close) overapplied or underapplied overhead to Cost of Goods Sold.

Answer 1

Answer:

The overview of the problem is listed throughout the section below on explanation.

Explanation:

The Journal entry is given below:

No       Transaction        General journal      Debit($)    Credit($)

1                 1                Overhead of factory   120000      

                                  Some other accounts                    120000

2               2           Process inventory's work  185500

                           $(345000-80000)\times 70 \ percent$                      

                                  Overhead of a factory                    185500