The following information is available for Lock-Safe Company, which produces special-order security products and uses a job order cost accounting system.

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.