Question

Required information The following information applies to the questions displayed below.) 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 $ $25,000 9.100 55,000 56,000 20,700 34,500 179,000 100,000 Inventores Raw materials Work in process Finished goods Activities and information for May Raw materials purchases (paid with cash) Factory payroll (paid with cash) Factory overhead Indirect materials Indirect labor Other overhead costs Sales (received in cash) Predetermined overhead rate based on direct labor cost 11,000 23,000 109,000 1,300,000 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.

Answer 1

According to the requirement of the question, we have to calculate Cost of direct material used, Cost of Direct Labor used, Cost of Goods manufactured, Cost of goods sold, Gross profit, Over applied or under applied overhead.

Account Ledgers

Raw Materials (RM)

Raw Materials - April 30	$25,000
Raw Materials Purchases	$179,000
		Direct Material used (Working Note)	$137,000
		Indirect materials	$11,000
Raw Materials - May 31	$56,000

  Work In Process

Work in Process - April 30	$9,100
Direct Material used	$137,000
Direct Labor used	$77,000
Overhead applied (Balancing Figure)	$42,350	Cost of Goods Manufactured (Working Note)	$244,750
Work in Process - 31 May	$20,700

  Factory Payroll

Factory Payroll	$100,000
		Indirect Labor	$23,000
		Direct Labor Used (Working Note)	$77,000

Factory Overhead

Indirect Materials	$11,000
Indirect Labor	$23,000
Other Overhead Cost	109,000
		Overhead Applied (Work in process)	$42,350
Under Applied Overhead	$100,650

Finished Goods (FG)

Finished Goods - April 30	$55,000
Cost of Goods Manufactured (Work in Process)	$244,750
		Cost of Goods Sold (Working Note)	$265,250
Finished Goods - May 31	$34,500

Income Statement (Partial)

Sales	$1,300,000
Less: Cost of Goods Sold	$(265,250)
Gross Profit	$1,034,750

Working Note:-

Requirement 1:- Calculation of Cost of Direct Material Used

Solution:- $137,000

Beginning Raw Materials Inventory	$25,000
Add: Purchases	$179,000
Raw materials available	$204,000
Less: Ending Raw Materials Inventory	$(56,000)
Total Raw Material used	$148,000
Less: Indirect Materials used	$(11,000)
Cost of Direct Material used	$137,000

Requirement 2:- Calculation of Cost of Labor Used

Solution:- $77,000

Total factory Payroll	$100,000
Less: Indirect Labor	$(23,000)
Cost of Direct Labor used	$77,000

Requirement 3:- Calculation of Cost of Goods Manufactured

Solution:- $244,750

Beginning Work in Process	$9,100
Add: Direct Materials (part 1)	$137,000
Add: Direct Labor (part 2)	$77,000
Add: Overhead applied (55% of Labor cost) ($77,000 * 55%)	$42,350
Total Cost of Work in Process	$265,450
Less: Ending Work in Process	$(20,700)
Cost of Goods Manufactured	$244,750

Requirement 4:- Calculation of Cost of Goods Sold.

Solution:- $265,250

Beginning Finished Goods Inventory	$55,000
Add: Cost of Goods Manufactured (part 3)	$244,750
Less: Ending Finished Goods Inventory	$(34,500)
Cost of Goods Sold	$265,250

Requirement 5:- Calculation of Gross Profit.

Solution:- $1,034,750

Sales	$1,300,000
Less: Cost of Goods Sold	$(265,250)
Gross Profit	$1,034,750

Requirement 6:- Calculation of Actual Overhead Incurred.

Solution:-

Indirect Materials	$11,000
Indirect Labor	$23,000
Other Overhead Cost	$109,000
Total Actual Overhead Incurred	$143,000
Overhead Applied	$(42,350)
Under Applied Overhead	$100,650

Thank you..

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