Question

The following information is available for Lock-Tite Company, which produces special-order security products and uses a job order cost accounting system. Inventories April 30 $43,000 10,200 May 31 $52,000 21,300 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 63,000 35,600 210,000 345,000 15,000 80,000 120,000 1,400,000 70% 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

- trening & Raw stock of raw materials. material purchase 43000 210,000 253000 52000 closing Stork of raw materials, 201000 Cost of direct Material used) 34 5000 ) Fastery Payroll Direct Labour] 546000 Cost of direct labowe Used -1.500 in Overheads. Factory anerehead. Indirect materials: Indirect Labour. (t) opening work in progress- 80,000 95000 E closing woork-in-progress. lost of goods Manufactured) Other crophead cost (+) opening finished goods & closing finished goods. Cost of goodo Sold > Gross preofit 44100 10 200 651200 21300 629900 120,000 1749900 63000 812700 35600 17.77300 622700 Sales. 1400000

to Budgeted overhead Cost (34 (70 % of Direct Labour 241500 70% of 345000 Actual Leber Overhead lost. factory overhead & 9500 other over heads - 120,000 215000 Overapplied overhead 26500 It is overapplied overhead because Companies over head cost is less than the budgeted overhead Cost.