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 $ $26,000 9,700 58,000 51,000 20,300 33,800 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 187,000 150,000 7,000 34,500 118,500 1,700,000 55%

Answer 1

	Raw materials (RM)						Work in Process (WIP)
RM-April 30	26000					WIP-April 30	9700
RM purchases	187000					DM used	155000
		7000	Indirect materials			DL used	115500
		155000	DM used			Overhead applied	63525	323425	Cost of goods manuf.
RM-May 31	51000					WIP-May 31	20300
	Finished goods (FG)						Factory Overhead
FG-April 30	58000					Indirect materials	7000	63525	Overhead applied
Cost of goods manuf.	323425					Indirect labor	34500
		347625	Cost of goods sold			Other overhead costs	118500
FG-May 31	33800
						Underapplied OH	96475
Income Statement (Partial)
Sales	1700000
Cost of goods sold	347625
Gross Profit	1352375
2
	Debit	Credit
Raw materials inventory	187000
Cash		187000
(To record raw material purchases)
Work in Process inventory	155000		=26000+187000-7000-51000
Raw materials inventory		155000
(To record direct materials used)
Factory overhead	7000
Raw materials inventory		7000
(To record indirect materials used)