Question

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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			$	55,000
Work in process		9,000				19,600
Finished goods		62,000				33,300
Activities and information for May
Raw materials purchases (paid with cash)						183,000
Factory payroll (paid with cash)						250,000
Factory overhead
Indirect materials						11,000
Indirect labor						57,500
Other overhead costs						116,000
Sales (received in cash)						1,900,000
Predetermined overhead rate based on direct labor cost						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) April 30 46,000 11,000 Indirect materials April 30 9,000 Cost of goods manuf. RM purchases 183,000 DM used DM used DL used Overhead applied May 31 218,000 May 31 9,000 Finished Goods (FG) Inventory Factory Overhead April 30 62,000 Cost of goods sold Indirect materials 11,000 Overhead applied Cost of goods manuf. Indirect labor 57,500 Other overhead costs 116,000 May 31 62,000 Underapplied OH 184,500

	Income statement (partial) Sales $1,900,000 Cost of goods sold Gross profit $1,900,000

Answer 1