The following information is available for ADT Company, which produces special-order security products and uses a job order costing system. Overhead is applied using a predetermined overhead rate of 70% of direct labor cost.

 The following information is available for ADT Company, which produces special-order security products and uses a job order costing system. Overhead is applied using a predetermined overhead rate of 70% of direct labor cost.
 
 

Inventories    Beginning of Period    End of Period
Raw materials    $ 43,000    $ 52,000
Work in process    10,200    21,300
Finished goods    63,000    35,600
 

Cost incurred for the period
Raw materials purchases    $ 210,000
Factory payroll    345,000
Factory overhead (actual)    
Indirect materials used    15,000
Indirect labor used    80,000
Other overhead costs    120,000
1. In the Raw Materials Inventory T-account, insert amounts for beginning and ending balances along with purchases and indirect materials used. Solve for direct materials used in the period.
2. Compute the cost of direct labor used for the period.
3. In the Work in Process Inventory T-account, insert amounts for beginning and ending balances along with direct materials used (from part 1), direct labor used (from part 2), and applied overhead. Solve for cost of goods manufactured in the period.
4. In the Finished Goods Inventory T-account, insert amounts for beginning and ending balances along with cost of goods manufactured (from part 3). Solve for cost of goods sold in the period (do not consider any under- or overapplied overhead).
5. In the Factory Overhead T-account, insert amounts for indirect materials used, indirect labor used, other overhead costs, and applied overhead. Solve for underapplied or overapplied overhead.

 

 

Compute the cost of direct labor used for the period.

Explanation
3.
Overhead applied = $265,000 × 70%

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

Prepare journal entries for the above transactions for the period.

Explanation
2.
Beginning raw materials ($43,000) + Raw materials purchased ($210,000) − Indirect materials used ($15,000) − Ending raw materials ($52,000) = $186,000

 

1. Direct labor used (recorded as factory wages payable).
2. Indirect labor used (recorded as factory wages payable).

Prepare journal entries for the above transactions for the period.

Explanation
1.
Direct labor is equal to total payroll ($345,000) less indirect labor ($80,000) = $265,000

 

1. Incurred other actual overhead costs (all paid in Cash).
2. Applied overhead to work in process.
 
Prepare journal entries for the above transactions for the period.

Thanks