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 Inventories Raw materials $ 50,000 $ 38,000 Work in process 9,200 18,500 Finished goods 59,000 34,300 Activities and information for May Raw materials purchases (paid with cash) 171,000 Factory payroll (paid with cash) 100,000 Factory overhead Indirect materials 17,000 Indirect labor 23,000 Other overhead costs 106,000 Sales (received in cash) 1,800,000 Predetermined overhead rate based on direct labor cost 55 % Compute the following amounts for the month of May using T-accounts. Cost of direct materials used. Cost of direct labor used. Cost of goods manufactured. Cost of goods sold.* Gross profit.

Answer 1

Required T-accounts are as prepared below:

Material Inventory
Particulars	Amount ($)	Particulars	Amount ($)
opening	50,000	Indirect Material	17,000
Cash	171,000	Direct Material used	166,000
	221,000		183,000
Closing	38,000
Factory Payroll
Particulars	Amount ($)	Particulars	Amount ($)
Cash	100,000	Indirect Labour	23,000
		Direct Labour Used	77,000
	100,000		100,000
Work in process
Particulars	Amount ($)	Particulars	Amount ($)
opening	9,200	Cost of goods manufactured	276,050
Direct Material	166,000
Direct Labour	77,000
Overhead applied (55% of 77,000)	42,350
	294,550		276,050
closing	18,500
Finished goods inventory
Particulars	Amount ($)	Particulars	Amount ($)
opening	59,000	Cost of goods sold	300,750
WIP	276,050
	335,050		300,750
closing	34,300
Factory Overhead
Particulars	Amount ($)	Particulars	Amount ($)
Indirect Material	17,000	Applied overhead	42,350
Indirect Labour	23,000	Underapplied overhaed	103,650
Other overhead cost	106,000
	146,000		146,000
closing	0
Cost of goods sold inventory
Particulars	Amount ($)	Particulars	Amount ($)
opening	0
finished goods	300,750
Income Statement
Sales	1,800,000
Less: Cost of goods sold	300,750
Gross profit	1,499,250