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	$	28,000			$	55,000
Work in process		9,600				18,300
Finished goods		61,000				34,000
Activities and information for May
Raw materials purchases (paid with cash)						190,000
Factory payroll (paid with cash)						150,000
Factory overhead
Indirect materials						9,000
Indirect labor						34,500
Other overhead costs						95,500
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.

Part 2.

Raw materials purchases for cash.

Direct materials usage.

Part 3.

Direct labor usage.

Indirect labor usage.

Total payroll paid in cash.

Prepare journal entries for the above transactions for the month of May.

Part 4.

Incurred other overhead costs (record credit to Other Accounts).

Application of overhead to work in process.

Prepare journal entries for the above transactions for the month of May.

Indirect materials usage.

  Prepare journal entries for the above transactions for the month of May.

Answer 1

Raw Materials					Work in process
RM-April 30	28,000				WIP-April30	9,600
purchases	190,000				DM used	154,000
		9,000	ind materials		DL used	115,500	324,325	cost of goods mfg
		154,000	DM used		OH applied	63525
RM-May 31	55,000				WIP-may 31	18,300
Facotry payroll					finished goods
Factory	150,000				Fg-april 30	61,000
payroll		34,500	ind labor		Cost of	324,325	351,325	COGS
		115,500	DL used		goods mfg
					end bal	34,000
Factory overhead
ind materials	9,000	63,525	OH applied
ind labor	34,500
other oh costs	95,500
underapp	75,475
income Statement(partial)
Sales			1,400,000
cost of goods sold			351,325
Gross profit			1,048,675

1	cost of direct materials used			154,000
2	cost of direct labor used			115,500
3	cost of goods manufactued			324,325
4	cost of goods sold			351,325
5	Gross profit			1,048,675
6	overapplied or underapplied oh			75,475

Trasan	General journal				Debit	Credit
1	Raw materials inventory				190,000
	cash					190,000
2	Work in process inventory				154,000
	Raw materials invnetory					154,000
3	Factory overhead				9,000
	Raw materials inventory					9,000
Trasan	General journal				Debit	Credit
1	Work in process inventory				115,500
	Factory wages payable					115,500
2	Factory overhead				34,500
	Factory wages payable					34,500
3	Factory wages payable				150,000
	cash					150,000
Trasan	General journal				Debit	Credit
1	Factory overhead				95,500
	other accounts					95,500
	Work in process inventory				63,525
	Factory overhead					63,525