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	$	30,000			$	32,000
Work in process		9,400				20,300
Finished goods		60,000				34,600
Activities and information for May
Raw materials purchases (paid with cash)						190,000
Factory payroll (paid with cash)						250,000
Factory overhead
Indirect materials						16,000
Indirect labor						57,500
Other overhead costs						115,500
Sales (received in cash)						1,800,000
Predetermined overhead rate based on direct labor cost						55	%

Exercise 15-7 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.

1. Raw materials purchases for cash.
2. Direct materials usage.
3. Indirect materials usage.

1. Direct labor usage.
2. Indirect labor usage.
3. Total payroll paid in cash.

1. Incurred other overhead costs (record credit to Other Accounts).
2. Application of overhead to work in process.

Prepare journal entries for the above transactions for the month of May.

Answer 1

1	cost of direct materials used			172,000
2	cost of direct labor used			192,500
3	cost of goods manufactued			459,475
4	cost of goods sold			484,875
5	Gross profit			1,315,125
6	overapplied or underapplied oh			83,125

Trasan	General journal				Debit	Credit
1	Raw materials inventory				190,000
	cash					190,000
2	Work in process inventory				172,000
	Raw materials invnetory					172,000
3	Factory overhead				16,000
	Raw materials inventory					16,000
Trasan	General journal				Debit	Credit
1	Work in process inventory				192,500
	Factory wages payable					192,500
2	Factory overhead				57,500
	Factory wages payable					57,500
3	Factory wages payable				250,000
	cash					250,000
Trasan	General journal				Debit	Credit
1	Factory overhead				115,500
	other accounts					115,500
	Work in process inventory				105,875
	Factory overhead					105,875

Raw Materials					Work in process
RM-April 30	30,000				WIP-April30	9,400
purchases	190,000				DM used	172,000
		16,000	ind materials		DL used	192,500	459,475	cost of goods mfg
		172,000	DM used		OH applied	105875
RM-May 31	32,000				WIP-may 31	20,300
Facotry payroll					finished goods
Factory	250,000				Fg-april 30	60,000
payroll		57,500	ind labor		Cost of	459,475	484,875	COGS
		192,500	DL used		goods mfg
					end bal	34,600
Factory overhead
ind materials	16,000	105,875	OH applied
ind labor	57,500
other oh costs	115,500
underapp	83,125
income Statement(partial)
Sales			1,800,000
cost of goods sold			484,875
Gross profit			1,315,125