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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
Inventories
Raw materials	$	32,000			$	31,000
Work in process		9,800				18,200
Finished goods		66,000				33,400
Activities and information for May
Raw materials purchases (paid with cash)						176,000
Factory payroll (paid with cash)						150,000
Factory overhead
Indirect materials						6,000
Indirect labor						34,500
Other overhead costs						108,500
Sales (received in cash)						1,400,000
Predetermined overhead rate based on direct labor cost						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.*
5. Gross profit.
6. Overapplied or underapplied overhead.

  
*Do not consider any underapplied or overapplied overhead.

Answer 1

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Solution: Format and Naming convention is not available, can be slightly different: Answers are highlighted in yellow: Raw Material Inventory (RM) Apr.30 $ 32,000 RM purchases 176000 171000 DM used $ 6,000 Indirect Materials Work in Process Inventory (WIP) Apr.30 $ 9,800 DM used 171000341625 Cost of goods Manuf. DL Used 115500 Overhead applied 63525 May.31 $ 18,200 May.31 $ 31,000 Finished goods inventory (FG) Apr.30 $ 66,000 Cost of goods Manuf. 341625 374225 Cost of goods sold Indirect Materials Indirect Labor Other O/H cost Factory overhead $ 6,000 63525 Overhead applied $ 34,500 108500 May.31 $ 33,400 Underapplied OH $ 85,475 Answers: Cost of direct material used 171000 Income Statement (Partial) Sales Less: Cost of goods sold Gross Profit 1400000 374225 1025775 Cost of Direct Labor used (150000-34500) 115500 3) Cost of goods manufactured 341625 Cost of goods sold 374225 5) Gross Profit (without underapplied overhead) 1025775 Overapplied or underapplied overhead (refer MOH) 85475