Required information [The following information applies to the questions displayed below.] 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 % Incurred other overhead costs (record credit to Other Accounts). Application of overhead to work in process. Prepare journal entries for the above transactions for the month of May.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Required information
[The following information applies to the questions displayed below.]
The following information is available for Lock-Tite Company, which produces special-order security products and uses a
| 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 |
|||||||
| 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 | % | |||||
- Incurred other overhead costs (record credit to Other Accounts).
- Application of overhead to work in process.
Prepare
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