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
Inventories
Raw materials	$	46,000			$	56,000
Work in process		9,400				18,100
Finished goods		66,000				33,600
Activities and information for May
Raw materials purchases (paid with cash)						171,000
Factory payroll (paid with cash)						250,000
Factory overhead
Indirect materials						17,000
Indirect labor						57,500
Other overhead costs						96,000
Sales (received in cash)						1,500,000
Predetermined overhead rate based on direct labor cost						55	%

Exercise 19-7 Cost flows in a job order costing system LO P1, P2, P3, P4

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.

Next

Answer 1

	Raw Materials
Apr-30	$ 46,000	$ 17,000	Indirect Materials
RM Purchases	$ 171,000	$ 144,000	DM Used
		($ 46,000 + $ 171,000 (-)$ 56,000 (-) $ 17,000 )
RM May 31	$ 56,000
	Factory Payroll
Factory Payroll	$ 250,000
		$ 57,500	Indirect Labor
		$ 192,500	DL Used ( $ 250,000 (-) $ 57,500)
	Factory Overhead
Indirect Materials	$ 17,000	$ 105,875	Overhead Applied ($ 192,500 x 55% )
Indirect Labor	$ 57,500
Other Overhead costs	$ 96,000
Underapplied OH	$ 64,625
	Work in Process(WIP)
Apr-30	$ 9,400
DM Used	$ 144,000
DL Used	$ 192,500	$ 433,675	Cost of Goods Manufactured ( Bal. Fig.)
Overhead Applied ($ 192,500 x 55% )	$ 105,875	( $ 9,400 + $ 144,000 + $ 192,500 + $ 105,875 (-)$ 18,100)
May-31	$ 18,100
	Finished Goods
Apr-30	$ 66,000
Cost of Goods Manufactured	$ 433,675	$ 466,075	Cost of Goods Sold
		( $ 66,000 + $ 433,675 (-) $ 33,600 )
May-31	$ 33,600
Income Statement(Partial)
Sales	$ 1,500,000
Less: Cost of Goods Sold	( $ 466,075)
Gross Profit	$ 1,033,925