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 $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
Pre-determined overhead rate based on direct labor cost 70%
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.
4. Gross profit.
5. Overapplied or underapplied overhead.
Do not consider any underapplied or overapplied overhead.
These are the accounts that are used t(that need to be filled in).
1. Raw Materials (RM)
2. Goods In Process (GIP)
3. Factory Payroll
4. Finished Goods (FG)
5. Factory Overhead
6. Income Statement (Partial)

Answer 1

Answer:

Lock-Tite Company

1. Cost of direct materials used = $186,000

2. Cost of direct labor used = $265,000

3. Cost of goods manufactured = $ 625,400

4. Cost of goods sold = $652,800

4. Gross profit = $747,200

5. Underapplied overhead = $29,500

Explanation:

a) Data and Calculations:

                             

Inventories           April 30    May 31

Raw materials    $43,000    $52,000

Work in process   10,200        21,300

Finished goods   63,000       35,600

Raw materials

Account Titles               Debit           Credit

Beginning balance    $43,000

Cash                           210,000

Factory overhead                            $15,000

Goods in Process                            186,000

Ending balance                              $52,000

Goods in process

Account Titles               Debit           Credit

Beginning balance     10,200

Raw materials          186,000

Factory payroll        265,000

Factory overhead    185,500

Finished Goods Inventory             625,400

Ending balance                                 21,300

Factory Payroll

Account Titles               Debit           Credit

Cash                      $345,000

Factory Overhead                           $80,000

Goods in Process                            265,000

Finished goods

Account Titles               Debit           Credit

Beginning balance     63,000

Goods in Process    625,400

Cost of goods sold                     652,800

Ending balance                             35,600

Factory Overhead

Account Titles               Debit           Credit

Raw materials          $15,000

Factory payroll          80,000

Cash                        120,000

Goods in Process                            $185,500

Balance                                               29,500

Income Statement (Partial)

Sales                           $1,400,000

Cost of goods sold         652,800

Gross profit                   $747,200