The following information is available for Lock-Safe Company, which produces special-order security products and uses a job order cost accounting system.
| April 30 | May 31 | ||||
| Inventories | |||||
| Raw materials | $ | 45,000 | $ | 52,000 | |
| Goods in process | 9,700 | 17,000 | |||
| Finished goods | 64,000 | 33,000 | |||
| Activities and information for May | |||||
| Raw materials purchases (paid with cash) | 195,000 | ||||
| Factory payroll (paid with cash) | 395,000 | ||||
| Factory overhead | |||||
| Indirect materials | 13,000 | ||||
| Indirect labor | 74,000 | ||||
| Other overhead costs | 98,000 | ||||
| Sales (received in cash) | 1,200,000 | ||||
| Predetermined overhead rate based on direct labor cost | 50 | % | |||
| 1. | Factory overhead excluding indirect materials and indirect labor (record credit to Other Accounts). |
| 2. | Application of overhead to goods in process. |
Prepare journal entries for the above events for the month of May.
Explanation:
| Cost of direct labor used | ||
| Total factory payroll | $ | 395,000 |
| Less indirect labor | (74,000) | |
| Cost of direct labor used | $ | 321,000 |
| Factory overhead: $321,000 × 50% = $160,500. |