Question

1.
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 9,200 54,000 55,000 19,800 34,300 Inventories 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 190,000 250,000 9,000 57,500 103,500 1,300,000 550 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.

Answer 1

	Raw materials (RM)						Work in Process (WIP)
RM-April 30	25000					WIP-April 30	9200
RM purchases	190000					DM used	151000
		9000	Indirect materials			DL used	192500
		151000	DM used			Overhead applied	105875	438775	Cost of goods manuf.
RM-May 31	55000					WIP-May 31	19800
	Finished goods (FG)						Factory Overhead
FG-April 30	54000					Indirect materials	9000	105875	Overhead applied
Cost of goods manuf.	438775					Indirect labor	57500
		458475	Cost of goods sold			Other overhead costs	103500
FG-May 31	34300
						Underapplied OH	64125
Income Statement (Partial)
Sales	1300000
Cost of goods sold	458475
Gross Profit	841525
2
For Raw materials:
	Debit	Credit
Raw materials inventory	190000
Cash		190000
Work in Process inventory	151000		=25000+190000-9000-55000
Raw materials inventory		151000
Factory overhead	9000
Raw materials inventory		9000
3
For Labor:
	Debit	Credit
Work in Process inventory	192500		=250000-57500
Factory wages payable		192500
Factory overhead	57500
Factory wages payable		57500
Factory wages payable	250000
Cash		250000
4
For overhead:
	Debit	Credit
Factory overhead	103500
Other accounts		103500
Work in Process inventory	105875		=(250000-57500)*55%
Factory overhead		105875