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	$	49,000			$	50,000
Work in process		9,700				18,800
Finished goods		59,000				34,600
Activities and information for May
Raw materials purchases (paid with cash)						174,000
Factory payroll (paid with cash)						250,000
Factory overhead
Indirect materials						9,000
Indirect labor						57,500
Other overhead costs						109,500
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)
	0					0
Finished Goods (FG) Inventory					Factory Overhead
	0
						0

Income statement (partial)
	$0

Answer 1

	Raw materials (RM)						Work in Process (WIP)
RM-April 30	49000					WIP-April 30	9700
RM purchases	174000					DM used	164000
		9000	Indirect materials			DL used	192500
		164000	DM used			Overhead applied	105875	453275	Cost of goods manuf.
RM-May 31	50000					WIP-May 31	18800
	Finished goods (FG)						Factory Overhead
FG-April 30	59000					Indirect materials	9000	105875	Overhead applied
Cost of goods manuf.	453275					Indirect labor	57500
		477675	Cost of goods sold			Other overhead costs	109500
FG-May 31	34600
						Underapplied OH	70125
Income Statement (Partial)
Sales	1900000
Cost of goods sold	477675
Gross Profit	1422325