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 s $49,000 9,800 65,000 53,000 18,500 34,100 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 172,000 250,000 15,000 57,500 94,000 1,200,000 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." 5. Gross profit 6. Overapplied or underapplied overhead. "Do not consider any underapplied or overapplied overhead, Raw Materials (RM) Work in Process (WIP) 0 0 Finished Goods (FG) Inventory Factory Overhead

Answer 1

	Raw Materials
Apr-30	$ 49,000	$ 15,000	Indirect Materials
RM Purchases	$ 172,000	$ 153,000	DM Used
		($ 49,000 + $ 172,000 (-)$ 53,000 (-) $ 15,000 )
RM May 31	$ 53,000
	Factory Payroll
Factory Payroll	$ 250,000
		$ 57,500	Indirect Labor
		$ 192,500	DL Used ( $ 250,000 (-) $ 57,500)
	Factory Overhead
Indirect Materials	$ 15,000	$ 105,875	Overhead Applied ($ 192,500 x 55% )
Indirect Labor	$ 57,500
Other Overhead costs	$ 94,000
Underapplied OH	$ 60,625
	Work in Process(WIP)
Apr-30	$ 9,800
DM Used	$ 153,000
DL Used	$ 192,500	$ 442,675	Cost of Goods Manufactured ( Bal. Fig.)
Overhead Applied ($ 192,500 x 55% )	$ 105,875	( $ 9,800 + $ 153,000 + $ 192,500 + $ 105,875 (-)$ 18,500)
May-31	$ 18,500
	Finished Goods
Apr-30	$ 65,000
Cost of Goods Manufactured	$ 442,675	$ 473,575	Cost of Goods Sold ( Bal. Fig.)
May-31	$ 34,100
Income Statement(Partial)
Sales	$ 1,200,000
Less: Cost of Goods Sold	($ 473,575)
Gross Profit	$ 726,425