Homework Help is Here – Start Your Trial Now!
Business
Accounting
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 $51,000 11,800 71,000 $ 68,000 24,500 51,600 Work in process Finished goods Activities and information for May Raw materials purchases (paid with cash) Factory payroll (paid with cash) Factory overhead Indirect materials 226,000 377,000 31,000 96,000 136,000 1,560,000 Indirect labor Other overhead costs Sales (received in cash) 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.

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 $51,000 11,800 71,000 $ 68,000 24,500 51,600 Work in process Finished goods Activities and information for May Raw materials purchases (paid with cash) Factory payroll (paid with cash) Factory overhead Indirect materials 226,000 377,000 31,000 96,000 136,000 1,560,000 Indirect labor Other overhead costs Sales (received in cash) 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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

How do you solve this problem? 

--- ### Assessing Overhead Application in Cost Accounting This section guides you through the process to determine whether your factory overhead is over- or underapplied. Follow the steps by entering the necessary data into the corresponding fields. #### Step 1: Data Entry Utilize the provided table to input the required variables for calculating overhead application. #### Factory Overhead Calculation Table - The table features rows and columns designed for inputting specific overhead data. - The first column represents different categories or components of factory overhead. - Subsequent columns are for entering relevant data, including the budgeted overhead, actual overhead, and overhead applied based on predetermined rates. #### Example Table Structure: | | Budgeted Overhead | Actual Overhead | Overhead Applied | |-----------------|-------------------|-----------------|------------------| | **Category 1** | | | | | **Category 2** | | | | | **Category 3** | | | | Use the dropdown menu within the table to select or specify certain conditions or calculations as needed. #### Step 2: Interpretation - Upon completing the data entry, analyze the figures to comprehend the status of your overhead: - **Overapplied Overhead**: When the applied overhead exceeds the actual overhead incurred. - **Underapplied Overhead**: When the actual overhead incurred is more than the applied overhead. #### Navigation - To move forward or backward within the sections, use the provided navigation buttons: - **Overhead Absorption**: For inputting and reviewing the applied overhead data. - **General Journal**: For proceeding to the journal entries related to adjusting over- or underapplied overhead. --- For further guidance, access the tabs labeled "Overhead Absorption" and "General Journal" to enter and review your answers systematically.
Transcribed Image Text:--- ### Assessing Overhead Application in Cost Accounting This section guides you through the process to determine whether your factory overhead is over- or underapplied. Follow the steps by entering the necessary data into the corresponding fields. #### Step 1: Data Entry Utilize the provided table to input the required variables for calculating overhead application. #### Factory Overhead Calculation Table - The table features rows and columns designed for inputting specific overhead data. - The first column represents different categories or components of factory overhead. - Subsequent columns are for entering relevant data, including the budgeted overhead, actual overhead, and overhead applied based on predetermined rates. #### Example Table Structure: | | Budgeted Overhead | Actual Overhead | Overhead Applied | |-----------------|-------------------|-----------------|------------------| | **Category 1** | | | | | **Category 2** | | | | | **Category 3** | | | | Use the dropdown menu within the table to select or specify certain conditions or calculations as needed. #### Step 2: Interpretation - Upon completing the data entry, analyze the figures to comprehend the status of your overhead: - **Overapplied Overhead**: When the applied overhead exceeds the actual overhead incurred. - **Underapplied Overhead**: When the actual overhead incurred is more than the applied overhead. #### Navigation - To move forward or backward within the sections, use the provided navigation buttons: - **Overhead Absorption**: For inputting and reviewing the applied overhead data. - **General Journal**: For proceeding to the journal entries related to adjusting over- or underapplied overhead. --- For further guidance, access the tabs labeled "Overhead Absorption" and "General Journal" to enter and review your answers systematically.
### 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 order costing system. |   | April 30 | May 31 | | --- | --- | --- | | **Inventories** |   |   | | Raw materials | $51,000 | $68,000 | | Work in process | 11,800 | 24,500 | | Finished goods | 71,000 | 51,600 | |   |   |   | | **Activities and Information for May** |   |   | | Raw materials purchases (paid with cash) |   | 226,000 | | Factory payroll (paid with cash) |   | 377,000 | | Factory overhead |   |   | | Indirect materials |   | 31,000 | | Indirect labor |   | 96,000 | | Other overhead costs |   | 136,000 | | Sales (received in cash) |   | 1,560,000 | | Predetermined overhead rate based on direct labor cost |   | 70% | **Tasks:** 1. Determine whether there is over or underapplied overhead. 2. Prepare the journal entry to allocate (close) overapplied or underapplied overhead to Cost of Goods Sold. **Explanation:** To find out if overhead is over or underapplied, you compare the actual overhead costs incurred with the overhead costs applied to production based on the predetermined overhead rate. **Step-by-Step Instructions:** 1. **Calculate the actual overhead incurred:** Actual overhead is given by the sum of indirect materials, indirect labor, and other overhead costs. \[ \text{Actual Overhead} = \$31,000 + \$96,000 + \$136,000 = \$263,000 \] 2. **Calculate the applied overhead:** Applied overhead is calculated using the predetermined overhead rate and the actual direct labor cost for May. Direct labor cost = Factory payroll = \$377,000 \[ \text{Applied Overhead} = \text{Direct Labor Cost} \times \text{Predetermined Overhead Rate
Transcribed Image Text:### 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 order costing system. |   | April 30 | May 31 | | --- | --- | --- | | **Inventories** |   |   | | Raw materials | $51,000 | $68,000 | | Work in process | 11,800 | 24,500 | | Finished goods | 71,000 | 51,600 | |   |   |   | | **Activities and Information for May** |   |   | | Raw materials purchases (paid with cash) |   | 226,000 | | Factory payroll (paid with cash) |   | 377,000 | | Factory overhead |   |   | | Indirect materials |   | 31,000 | | Indirect labor |   | 96,000 | | Other overhead costs |   | 136,000 | | Sales (received in cash) |   | 1,560,000 | | Predetermined overhead rate based on direct labor cost |   | 70% | **Tasks:** 1. Determine whether there is over or underapplied overhead. 2. Prepare the journal entry to allocate (close) overapplied or underapplied overhead to Cost of Goods Sold. **Explanation:** To find out if overhead is over or underapplied, you compare the actual overhead costs incurred with the overhead costs applied to production based on the predetermined overhead rate. **Step-by-Step Instructions:** 1. **Calculate the actual overhead incurred:** Actual overhead is given by the sum of indirect materials, indirect labor, and other overhead costs. \[ \text{Actual Overhead} = \$31,000 + \$96,000 + \$136,000 = \$263,000 \] 2. **Calculate the applied overhead:** Applied overhead is calculated using the predetermined overhead rate and the actual direct labor cost for May. Direct labor cost = Factory payroll = \$377,000 \[ \text{Applied Overhead} = \text{Direct Labor Cost} \times \text{Predetermined Overhead Rate
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 1 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Analytical Techniques
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS