Question

Use the following information to answer questions

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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	$	32,000			$	36,000
Work in process		10,000				18,700
Finished goods		65,000				34,100
Activities and information for May
Raw materials purchases (paid with cash)						172,000
Factory payroll (paid with cash)						150,000
Factory overhead
Indirect materials						10,000
Indirect labor						34,500
Other overhead costs						117,000
Sales (received in cash)						1,100,000
Predetermined overhead rate based on direct labor cost						55	%

Exercise 15-7 Cost flows in a job order costing system LO P1, P2, P3, P4

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)
Beginning Balance			Indirect materials		Beginning Balance			Cost of goods manuf.
RM purchases			DM used		DM used
					DL used
					Overhead applied
Ending balance					Ending balance
Finished Goods (FG)					Factory Overhead
Beginning Balance					Indirect materials			Overhead applied
Cost of goods manuf.					Indirect labor
					Other overhead costs
Ending balance
					Underapplied OH

Income statement (partial)

Sales

Cost of goods sold

Gross profit

Answer 1

	Raw materials (RM)						Work in Process (WIP)
RM-April 30	32000					WIP-April 30	10000
RM purchases	172000					DM used	158000
		10000	Indirect materials			DL used	115500
		158000	DM used			Overhead applied	63525	328325	Cost of goods manuf.
RM-May 31	36000					WIP-May 31	18700
	Finished goods (FG)						Factory Overhead
FG-April 30	65000					Indirect materials	10000	63525	Overhead applied
Cost of goods manuf.	328325					Indirect labor	34500
		359225	Cost of goods sold			Other overhead costs	117000
FG-May 31	34100
						Underapplied OH	97975
Income Statement (Partial)
Sales	1100000
Cost of goods sold	359225
Gross Profit	740775