Question

(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 $ $ 35,000 9,200 56,000 55,000 18,700 33,200 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 185,000 100,000 13,000 23,000 104,000 1,400,000 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) Finished Goods (FG) Inventory Factory Overhead Income statement (partial)

Answer 1

Raw Materials (RM) RM- April 30 $35,000 RM purchases $185,000 $ 13,000 Indirect Materials $152,000 DM used Rom. May $55,000 3) factory Payroll factory payroll $100,000 $ 23,000 Indirect labor $77,000 DL used factory Overhead Indirect materials & 13,000 & 42,350 Overhead applied Indirect labor $ 23,00 0 other overhead costs $ 104,000 Underapplied OH $ 97,6501 work in Process (WIP) WIP - April 30 & 9,200 DM used $152,000 DL used $ $77,000 $261,850 Cost of good, manuf Overhead applied & 42,350 WIP - May 31 $ 18,700

finished goods (FG) FG- April 30 $ 56,000 Cost of goods manuf $261,850 $284,650 Cost of goods sold Ie- May 31 $33200 Income statement (partray Sales $ 1,400,000 cost of goods sold $ 284,650 Groms Profit $ 1, 115,350 Calculation: che cost of direct materials used, Add: Beginning raw materials inventory Purchases Raw materials available Less: Ending raw materials inventory Total Raw materials used les: Indirect materials used cost of direct materials used $ 35,000 $ 185,000 $ 220,000 $ 55,000 $ 165,000 $ 13,000 IF 152,000

(2) Cost of direct labor used Total factory pay hou $ 100,000 less: Indirect labor $ 23,000 cost of direct labor used 1$ 77,000 (3) Cost of goods manufactured Beginning work in process inventory $ 9,200 Addi Direct materials |$152,000 Add : Direct labor $ 77,000 Add: Overhead applied $ 42,350 Total cost of work in process $ $ 200, 550 Les Ending work in process inventory $ 18,700 Cost of goods manufactured 18 261,850 55% of 엉 Dineet Labor cost = 557 * $ 77,000 $ 42,350 Overhead applied «Ч 4. Cost of goods sold Beginning finished goods inventory Add: cost of goods manufactured less. Ending finished goods inventory Cost of goods sold $ 56,000 $ 261,850 $ 33, 200 $ 284,650

ری Gross Profit Sales $1,400,000 less cost of goods sold & 284,650 Gros Profit $1,115,350 (6) Actual overhead incurred Indirect materials $ 13,000 Indirect labor $ 23,000 other overhead coats Total actual overhead incurred $ 140,000 L lesi Overhead applied $ 42,350 Under applied overhead 18 97,650 Overhead applied =55% of Direct labor cont =5597 X $77,000 = $42,350

credit Transaction General Journal Debit Raw Materials Inventory $ 185,000 Cash 140 second saw materials purchases $ 185000 Work in process inventory $152,000 Raw Materials invento ny (to record direct materials used) $152,000 3. ره factory overhead $ 13,000 Raw materials Inventory $13,000 (to second indirect materials used) calculation: , Work in process inventory = (Beginning raw materials + Raw materials purchased - Indixeet materials ured - Ending raw materials) $35,000 + $185,000 - $13,000 - $155,000 $152,000 transactions Debit $ 77,000 credit 1 $77,000 General Journal work in process inventory factory wages payable (to second direct labor usedy factory overhead factory wages Payable to second indirect labor used) $23,000 $ 23,000

3 factory wages payable $100,000 Cash $100,000 to record total payroll paid) Calculation : work in process inventory - Total factory payroll - Indirect $100,000 - $23,000 $77,000 labor Credit Transaction General Journal factory Overhead other accounts (to second other overhead costs) Tebit $ 104,000 $104,000 $42,350 work in process inventory factory overhead $42,350 (to second overhead applied ) Calculation 12, Work in process inventory: cost of direct labor used a total factory payron - Indirect Labor = $100,000 $23,000 = $77,000 factory overhead $ 77,000 X 55% $ 42,350