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 $ $ 35,000 9,500 54,000 55,000 20,800 34,000 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 183,000 300,000 14,000 69,000 102,500 1,500,000 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.

Answer 1

Answer:

1: Cost of direct material used = $149,000

2: Cost of direct labor used = $231,000

3: Cost of goods manufactured = $495,750

4: Cost of goods sold = $515,750

5: Gross profit = $984,250

6: Underapplied overhead = $58,450

Working:

Raw Materials:

Opening bal	$35,000	$14,000	Factory overhead
Purchased	$183,000	$149,000	Direct material used (Bal fig)
		$55,000	Ending bal
	$218,000	$218,000

Work-in-process:

Opening bal	$9,500	$495,750	To Finished goods (Bal fig)
Direct material	$149,000	$20,800	Ending bal
Direct labor	$231,000
App.OH	$127,050
	$516,550	$516,550

Factory Payroll:

Cash	$300,000	$69,000	Factory OH
		$231,000	Direct labor (Bal fig)
	$300,000	$300,000

Finished goods:

Opening bal	$54,000	$515,750	COGS (Bal fig)
In WIP	$495,750	$34,000	Ending bal
	$549,750	$549,750

Factory Overhead:

Indirect material	$14,000	$127,050	Applied OH (231,000 * 55%)
Indirect labor	$69,000	$58,450	Underapplied OH (Bal fig)
Other	$102,500
	$185,500	$185,000

Income statement (Partial)

Sales	$1,500,000
(-) Cost of goods sold	($515,750)
Gross profit	$984,250