Question

Use the following information to answer questions [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 $ 48,000 $ 48,000 Work in process 9,900 19,700 Finished goods 67,000 33,700 Activities and information for May Raw materials purchases (paid with cash) 194,000 Factory payroll (paid with cash) 150,000 Factory overhead Indirect materials 14,000 Indirect labor 34,500 Other overhead costs 116,000 Sales (received in cash) 1,100,000 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. Cost of direct materials used. Cost of direct labor used. Cost of goods manufactured. Cost of goods sold.* Gross profit. Overapplied or underapplied overhead. *Do not consider any underapplied or overapplied overhead.

Answer 1

RAW MATERIAL INVENTORY
May 1 balance		48,000	Work in Process		180,000
Cash		194,000	(material used)
			Manufacturing overheads		14000
May 31 Balance		48,000
MANUFACTURING OVERHEADS
Raw material Inv.		14,000	Work in Process		63,525
Wages		34,500	(115500*55%)
Cash		116,000
balance		100,975
WAGES PAYABLE
Cash Account		150,000	Manufacturing overheads		34,500
			Work in process		115,500
			(Direct labouor cost)
balance		Nil
WORK IN PROCESS
may1 balance		9,900	Finished Goods		349,225
Raw material		180,000	(cost of goods manufactured)
Wages payable		115,500
Manufacturing overheads		63,525
balance		19,700
FINISHED GOODS INVENTORY
May 1 Balance		67,000	Cost of Goods sold		382,525
work in process		349,225
balance		33,700
Req 1: Cost off direct material used: $ 180,000
Req 2: Cost of direct labour cost: $ 115,500
Req3: Cost of goods manufactured: $ 349,225
Req 4: Cost of goods sold: $ 382,525
Req 5: Gross profit = Sales - Cost of Goods sold
		$ 1100,000 - $ 382,525 = $ 717,475
Req 6: Under Applied overheads : $ 100,975 (as debit balance in Overheads account)