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 $ 40,000 $ 9,400 53,000 18,500 33,400 58,000 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 176,000 150,000 9,000 34,500 118,500 1,200,000 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. 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	40000					WIP-April 30	9400
RM purchases	176000					DM used	154000
		9000	Indirect materials			DL used	115500
		154000	DM used			Overhead applied	63525	323925	Cost of goods manuf.
RM-May 31	53000					WIP-May 31	18500
	Finished goods (FG)						Factory Overhead
FG-April 30	58000					Indirect materials	9000	63525	Overhead applied
Cost of goods manuf.	323925					Indirect labor	34500
		348525	Cost of goods sold			Other overhead costs	118500
FG-May 31	33400
						Underapplied OH	98475
Income Statement (Partial)
Sales	1200000
Cost of goods sold	348525
Gross Profit	851475