Question

Use the following information to answer questions [The following information applies to the questions displayed below.]...

Use the following information to answer questions

[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 $ 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

Homework Answers

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
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