Question

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 $ $49,000 9,700 70,000 51,000 18,400 33,900 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 194,000 300,000 11,000 69,000 97,500 1,100,000 55% Exercise 15-7 Cost flows in a job order costing system LO P1, P2, P3, P4 Compute the following amounts for the month of May using T-accounts.

Answer 1

Raw materials (RM)				Work in Process (WIP)
April 30	$49,000	$11,000	Indirect materials	April 30	$9,700
RM purchases	194,000	181,000	DM used	DM used	181,000
				DL used	231,000	$530,350	Cost of goods manufactured
May 31	$51,000			Overhead applied	127,050
				May 31	$18,400
Finished Goods (FG)				Factory Overhead
April 30	$70,000			Indirect materials	$11,000	$127,050	Overhead applied
Cost of goods manufactured	530,350			Indirect labor	69,000
		$566,450	Cost of goods sold	Other overhead costs	97,500
May 31	$33,900
				Underapplied overhead	$50,450

Income Statement (partial)
Sales	$1,100,000
Cost of goods sold	(566,450)
Gross profit	$533,550