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 May 31 April 30 Inventories Raw materials Work in process Finished goods Activities and information for May Raw materials purchases (paid with cash) Factory payroll (paid with cash) $44,000 9,400 59,000 20,800 34,300 56,000 188,000 150,000 Factory overhead Indirect materials Indirect labor 15,000 34,500 99,000 1,500,000 55 Other overhead costs Sales received in cash) Predetermined overhead rate based on direct labor cost 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

Answer -

1.

Raw Materials (RM)
RM-April 30	$44000	$15000	Indirect materials
RM Purchases	$188000	$158000	Direct materials
RM-May 31	$59000

Calculation:

Cost of direct materials used
Beginning raw materials inventory	$44000
Add: Purchases	$188000
Raw materials available	$232000
Less: Ending raw materials inventory	$59000
Total Raw materials used	$173000
Less: Indirect materials used	$15000
Cost of direct materials used	$158000

2.

Factory Overhead
Indirect materials	$15000	$63525	Overhead applied
Indirect labor	$34500
Other overhead costs	$99000
Under applied overhead	$84975

Calculation:

Over applied or under applied overhead
Indirect materials	$15000
Indirect labor	$34500
Other overhead costs	$99000
Total actual overhead incurred	$148500
Overhead applied (55% * $115500)	$63525
Under applied overhead	$84975

3.

Factory Payroll
Factory payroll	$150000	434500	Indirect labor
		$115500	Direct labor
	$0

Calculation:

Cost of direct labor used
Total factory payroll	$150000
Less: Indirect labor	$34500
Cost of direct labor used	$115500

4.

Work in Process (WIP)
WIP-April 30	$9400	$325625	Cost of goods Manufactured
Direct materials used	$158000
Direct labor used	$115500
Overhead applied	$63525
WIP-May 31	$20800

Calculation:

Cost of goods manufactured
Beginning goods in process inventory	$9400
Add: Direct materials	$158000
Add: Direct labor	$115500
Add: Overhead applied (55% * $115500)	$63525
Total cost of goods in process	$346425
Less: Ending goods in process inventory	$20800
Cost of goods manufactured	$325625

5.

Finished Goods (FG)
FG-April 30	$56000	$347325	Cost of goods sold
Cost of goods Manufactured	$325625
FG-May 31	$34300

Calculation:

Cost of goods sold
Beginning finished goods inventory	$56000
Add: Cost of goods manufactured	$325625
Less: Ending finished goods inventory	$34300
Cost of goods sold	$347325

6.

Income Statement (Partial)
Sales	$1500000
Cost of goods sold	($347325)
Gross profit	$1152675