Determine and Use Overhead Rate The following selected ledge

Determine and Use Overhead Rate The following selected ledger accounts of the Lakewood Manufacturing Company are for May (the fifth month of its accounting year); Material Inventory May 1 balance May debits 100,000 May credits 375,000 312,500 Factory Overhead May debits 400,000 May 1 balance 35,000 May credits 360,000 Work in Process Inventory May 1 balance May debits: 70,000 May credits 1,100,000 Direct material Direct labor Man. overhead 322,500 450,000 360,000 Factory Payroll Payable 570,000 May 1 balance 125,000 May credits 490,000 May debits Finished Goods Inventory May 255,000 balance 255,000 May credits 1,275,000 May debits 1,100,000

Solution

a. Indirect Material requistioned 52500 375000 - 322,500 direct material b. indirect labor cost 40,000 490,000-450,000 c. Manufacturing overhead rate 80% 360,000/450,000 0.8 d.. manufacturing overhead was under applied by $40,000 e. manufacturing overhead was under applied by 5000 f. cost of production completed in may 1,100,000 g. cost of goods sold in may 1,275,000