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. April 30 May 31 $ $46,200 9,209 54,00 36,000 19,700 34,700 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 193,000 250,000 17,000 57,500 114,500 1,700,000 55% 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." < Prev 6 7 8 9 of 21 !! Next >

Answer 1

Raw Materials (RM)					Work in process (WIP )
Apr-30	$ 46,000				Apr-30	$ 9,200	$ 473,875	cost of goods manf.
RM purchase	$ 193,000				DM used (see note 1)	$ 186,000		( see note 3)
		$ 17,000	Indirect Materials		DL used (see note 2)	$ 192,500
		$ 186,000	DM used ( see note 1 )		Overhead applied (see note 3)	$ 105,875
May-31	$ 36,000				May-31	$ 19,700

Finished Goods (FG)Inventory					Factory Overhead
Apr-30	$ 54,000	$ 493,175	Cost of goods sold		indirect materials	$ 17,000	$ 105,875	overhead applied
cost of goods manf.	$ 473,875		( see note 4 )		indirect labor	$ 57,500		( see note 3 )
( see note 3)					other overheads cost	$ 114,500
May-31	$34,700				under applied ( see note 6 )	$ 83,125

Factory Payroll					Income statement (Partial )
Factory payroll	$ 250,000	$ 57,500	indirect labor		Sales	$ 1,700,000
( Bal in fig )		$ 192,500	DL used		Cost of goods sold( see note 4 )	($ 493,175)
			( see note 2 )		Gross profit	$ 1,206,825

Explanation :
1)	Cost of direct materials used :
	Beginning raw materials inventory	$ 46,000
	Add: purchase	$ 193,000
	Raw materials available	$ 239,000
	less: Ending raw materials inventory	($36,000)
	Total raw materials used	$ 203,000
	less: Indirect materials used	($17,000)
	Cost of direct materials used	$ 186,000
2)	Cost of direct labor used :
	Total factory payroll	$ 250,000
	less: indirect labor	($ 57,500)
	Cost of direct labor used	$ 192,500
3)	Cost of goods manufactured :
	Beginning work in process inventory	$ 9,200
	Add: Direct materials( see note 1 )	$ 186,000
	Add: Direct labor (see note 2 )	$ 192,500
	Add: Overhead applied ($192,500*55%)	$ 105,875
	( 55 % of direct labor cost )
	Total cost of work in process	$ 493,575
	Less: Ending work in process inventory	($ 19,700)
	Cost of goods manufactured	$ 473,875
4)	Cost of goods sold :
	Beginning finished goods inventory	$ 54,000
	Add: Cost of goods manufactured( see note 3)	$ 473,875
	Less: Ending Finished goods inventory	($34,700)
	cost of goods sold	$ 493,175
5)	Gross profit :
	Sales	$ 1,700,000
	less: Cost of goods sold( see note 4 )	($ 493,175)
	Gross profit	$ 1,206,825
6)	Actual overhead incurred :
	Indirect materials	$ 17,000
	Indirect labor	$ 57,500
	other Overhead costs	$ 114,500
	Total actual overhead incurred	$ 189,000
	Less: Overhead applied (see note 3 )	($ 105,875)
	Under applied overhead	$ 83,125