Sunday, 31 January 2016

Moonrise Bakery applies factory overhead based on direct labor costs. The company incurred the following costs during 2015: direct materials costs, \$650,000; direct labor costs, \$3,000,000; and factory overhead costs applied, \$1,800,000.

Moonrise Bakery applies factory overhead based on direct labor costs. The company incurred the following costs during 2015: direct materials costs, \$650,000; direct labor costs, \$3,000,000; and factory overhead costs applied, \$1,800,000.

Explanation:
2.
Factory overhead (\$20,000 × 40%) = \$12,000

3.
 We also know that the total of direct labor costs (X) and factory overhead costs (0.6X) equals \$240,000.  Thus, to get the individual amounts we need to solve: [X + 0.6X = \$240,000]. The solution is:

 Total cost of finished goods inventory = \$490,000 Less: Direct materials = 250,000 Direct labor and factory overhead costs = \$240,000

 Direct labor costs = \$150,000 Factory overhead costs = \$150,000 × 0.6 = \$90,000

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

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 %

Compute the following amounts for the month of May using T-accounts.

 1 Cost of direct materials used. 2 Cost of direct labor used. 3 Cost of goods manufactured. 4 Cost of goods sold.* 5 Gross profit. 6 Overapplied or underapplied overhead.

*Do not consider any underapplied or overapplied overhead.

Explanation:

 1 Raw materials purchases for cash. 2 Direct materials usage. 3 Indirect materials usage.

Prepare journal entries for the above transactions for the month of May.

Explanation:

 1 Direct labor usage. 2 Indirect labor usage. 3 Total payroll paid in cash.

Prepare journal entries for the above transactions for the month of May.

Explanation: