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	$	43,000			$	52,000
Work in process		10,200				21,300
Finished goods		63,000				35,600
Activities and information for May
Raw materials purchases (paid with cash)						210,000
Factory payroll (paid with cash)						345,000
Factory overhead
Indirect materials						15,000
Indirect labor						80,000
Other overhead costs						120,000
Sales (received in cash)						1,400,000
Predetermined overhead rate based on direct labor cost						70	%

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 Materials (RM)
RM - April 30	43,000
RM purchase	210,000
		Indirect materials	15,000
		DM used	186,000
RM - May 31	52,000
Work in Process (WIP)
WIP - April 30	10,200
DM used	186,000
Dl used	265,000	cost of goods sold	625,400
Overhead applied	185,500
WIP - May 31	21,300
Factory Payroll
Factory Payroll	345,000
		Indirect Labor	80,000
		DL used	265,000
	-
Factory Overhead
Indirect Materials	15,000	Overhead applied	185,000
Indirect Labor	80,000
Other overhead costs	120,000
Underapplied OH	29,500
Finish Goods (FG)
FG - April 30	63,000
Cost of goods manuf.	625,400
		Cost of goods sold	652,800
FG - May 31	35,600
Income statement
Sales	1,400,000
Cost of goods sold	652,800
Gross Profit	747,200