Lock Co Applies Factory Overhead to Production on the Basis of of Direct

question 65

Essay

Lock Co. applies factory overhead to production on the basis of direct labor costs. Assume that at the beginning of the current year the company estimated that direct material costs would be $178,800, direct labor costs would be $154,000, and factory overhead costs would be $231,000.
(1) If the $28,000 cost of Lock's Work in Process Inventory included $5,200 of direct labor cost, what amount of direct materials cost was included?
(2) If instead $8,100 of the company's $34,300 Finished Goods Inventory was direct materials cost, determine the direct labor cost and factory overhead cost of the finished goods inventory.

Identify and calculate various types of depreciation and amortization for fixed assets and intangibles.

Understand the accounting treatment and journal entries for asset exchanges and trade-ins with commercial substance.

Recognize the main accounting issues related to property, plant, and equipment.

Identify the factors leading to and the indications of obsolescence in property, plant, and equipment.

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Definitions:

Sales Taxes Payable

The liability account used to record the sales tax collected from customers by a seller, which is due to be paid to the government.

Cash Sales

Transactions in which goods or services are paid for and received at the time of the sale, using cash or equivalent.

Sales Taxes

Taxes imposed by governments on the sale of goods and services.

Journal Entry

A record in accounting that notes transactions and changes in financial statements.