Question

Required information 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 $ 43,000 $ 52,000 Work in process 10,200 21,300 Finished goods 63,000 35,600 Activities and information for May Raw materials purchases (paid with cash) 210,000 Factory payroll (paid with cash) 345,000 Factory overhead Indirect materials 15,000 Indirect labor 80,000 Other overhead costs 120,000 Sales (received in cash) 1,400,000 Predetermined overhead rate based on direct labor cost 70 % Exercise 02-7 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. 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.

Answer 1

Answer:

Cost of direct materials used =  $201,000

Cost of goods manufactured =  $776,400

Cost of goods sold = $803,800

Gross profit = $597,000

Overapplied or underapplied overhead = $26,500 Under-applied

Explanation:

Cost of direct materials used T - Account

Debit :

Beginning Raw Materials        $ 43,000

Raw materials purchases        $210,000

Totals                                        $253,000

Credit:

Ending  Raw Materials             $ 52,000

Raw materials used                  $201,000

Totals                                        $253,000

Cost of goods manufactured T -  Account

Debit :

Beginning Work in process      $10,200

Raw materials used                  $201,000

Factory payroll                         $345,000

Applied Overheads                  $241,500

Totals                                         $797,700

Credit:

Ending  Work in process           $21,300

Cost of Goods Manufactured $776,400

Totals                                        $797,700

Cost of goods sold T -  Account

Debit :

Beginning Finished goods        $63,000

Cost of Goods Manufactured  $776,400

Totals                                        $839,400

Credit:

Beginning Finished goods        $35,600

Cost of Goods Sold                  $803,800

Totals                                        $839,400

Trading Account T- Account

Debit :

Sales                                        $1,400,000

Totals                                       $1,400,000

Credit:

Cost of Goods Sold                  $803,800

Gross Profit                               $597,000

Totals                                       $1,400,000

Overheads T -  Account

Debit :

Indirect materials                        $15,000

Indirect labor                              $80,000

Other overhead costs               $120,000

Under-Applied                            $26,500

Totals                                         $241,500

Credit:

Applied Overheads                  $241,500

Totals                                         $241,500