In: Accounting
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 $ 28,000 $ 60,000 Work in process 9,500 20,900 Finished goods 50,000 34,300 Activities and information for May Raw materials purchases (paid with cash) 176,000 Factory payroll (paid with cash) 200,000 Factory overhead Indirect materials 11,000 Indirect labor 46,000 Other overhead costs 100,500 Sales (received in cash) 1,400,000 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. Overapplied or underapplied overhead. *Do not consider any underapplied or overapplied overhead.
GIVEN:
April 30 | May 31 | ||||
Inventories | (in $) | ||||
Raw materials | 28000 | 60000 | |||
Work in process | 9500 | 20900 | |||
Finished goods | 50000 | 34300 | |||
Activities and information for May | |||||
Raw materials purchases (paid with cash) | 176000 | ||||
Factory payroll (paid with cash) | 200000 | ||||
Factory overhead | |||||
Indirect materials | 11000 | ||||
Indirect labor | 46000 | ||||
Other overhead costs | 100500 | ||||
Sales (received in cash) | 1,400,000 | ||||
Predetermined overhead rate based on direct labor cost | 55 | % |
EXPLANATION:
1. | Cost of direct materials used | |||
Beginning raw materials inventory | $ | 28000 | ||
Plus purchases | 176000 | |||
Raw materials available | 204000 | |||
Less ending raw materials inventory | (60000) | |||
Total raw materials used | 144000 | |||
Less indirect materials used | (11000) | |||
Cost of direct materials used | $ | 133000 | ||
2. | Cost of direct labor used | |||
Total factory payroll | $ | 2000000 | ||
Less indirect labor | (46000) | |||
Cost of direct labor used | $ | 154000 | ||
3. | Cost of goods manufactured | |||
Beginning work in process inventory | $ | 9500 | ||
Plus direct materials | 133000 | |||
Plus direct labor | 154000 | |||
Plus overhead applied (55% of direct labor cost) |
,84700 | |||
Total cost of work in process | 381200 | |||
Less ending work in process inventory | (20900) | |||
Cost of goods manufactured | $ | 360300 | ||
4. | Cost of goods sold | |||
Beginning finished goods inventory | $ | 50000 | ||
Plus cost of goods manufactured | 360300 | |||
Less ending finished goods inventory | (34300) | |||
Cost of goods sold | $ | 376000 | ||
5. | Gross profit | |||
Sales | $ | 1,400,000 | ||
Cost of goods sold | (376000) | |||
Gross profit | $ | 1024000 | ||
6. | Actual overhead incurred | |||
Indirect materials | $ | 11000 | ||
Indirect labor | 46000 | |||
Other overhead costs | 100500 | |||
Total actual overhead incurred | 157500 | |||
Overhead applied | 84700 | |||
Underapplied overhead | $ | 72800 | ||