Question

Exercise 19-7 Cost flows in job order costing P1 P2 P3 P4 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 $ $43,000 10,200 63,000 52,000 21,300 35,600 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.............. 210,000 345,000 15,000 80,000 120,000 1,400,000 70% Compute the following amounts for the month of May. 1. Cost of direct materials used. 4. Cost of goods sold. (Do not consider any underapplied or overapplied overhead.) 2. Cost of direct labor used. 5. Gross profit. 3. Cost of goods manufactured. 6. Overapplied or underapplied overhead. Check (3) $625,400

Exercise 19-7 Cost flows in job order costing P1 P2 P3 P4 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 $ $43,000 10,200 63,000 52,000 21,300 35,600 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.............. 210,000 345,000 15,000 80,000 120,000 1,400,000 70% Compute the following amounts for the month of May. 1. Cost of direct materials used. 4. Cost of goods sold. (Do not consider any underapplied or overapplied overhead.) 2. Cost of direct labor used. 5. Gross profit. 3. Cost of goods manufactured. 6. Overapplied or underapplied overhead. Check (3) $625,400

Answer 1

Raw materials (Rm) RM - April 30 $43,000 RM purchases $210,000 $ 15,000 Indirect materials $ Төс,роо м еd RM-may 31 $52,000 factory factory Payroll payroll $345,000 $80,000 Indirect labor $265,000 DL used factory overhead Indirect materials $15,000 $185,500 Over head applied Indirect labor $80,000 Other Overhead costs $120,000 Underapplied OH $29,500 in Process (WIP) $ 10, 200, Work WIP - Aprid 30 DM used To used Overhead applied WIP - May 31 $265,000 $625,400 Cost of goods manuf.. $185, Soo $21,300

finished Goods (FG) LEG- April 30 $63,000 Cost of goods manuf. $ 625,400 $652,800 cost of goods sold LEGG - May 31 $35,600) sales Income Statement (Partial) $1,400,000 Cost of goods sold $652,800 Gross Profit $747,200 Calculation : (1) Cost of direct materials used Beginning raw materials inventory Add: Purchases Raw materials available less: Ending raw materials inventory Total Raw materials used ress: Indirect materials used I cost of direct materials used $ 43,000 $ 210000 $ 253,000 $ 52,000 $ 201,000 $ 15,000 186,000

2 Cost of direct labor used Total factory payroll $ 345,oos less: Indirect labor. & 80,000 I cost of direct labor used (3, cost of goods manufactured Beginning work in process inventory & 10,200 Add: Direct materials &186,000 Add: Direct labor $ 265,000 Add: Overhead applied & 185, soo Total cost of work in process $ 646,700 less Ending work in process inventory $ 21,300 cost of goods manufactured $ 625,400 Overhead applied = 70% of Direct Labor cost = 70% * $265,000 = $ 185,500 " Cost of goods sold Beginning finished goods inventory $ 63,000 Add: Cost of goods manufactured $ 625,400 ress: Ending finished goods inventory $ 35,600 cost of goods sold 1$ 652,800

s Gross Profit sales cost of goods Gross Profit sold $ 1,900,ooo € 652,800 $747,200 6, Actual overhead incurred Indirect materials Indirect labor other overhead costs Total actual overhead incurred less: overhead applied - Underapplied overhead $ 15,000 & 80,000 $ 120,000 $ 215,000 $ 185,500 $ 29,500 Overhead appried = 70% of Direct labor cost = 70% * $265,000 = $185,500