Question

The following information is available for TYPCO 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		9,900				20,400
Finished goods		57,000				34,100
Activities and information for May
Raw materials purchases (paid with cash)						183,000
Factory payroll (paid with cash)						100,000
Factory overhead
Indirect materials						17,000
Indirect labor						23,000
Other overhead costs						94,500
Sales (received in cash)						1,800,000
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.

Answer 1

Solution:

Raw Material (RM)
Apr 30 Balance	$43,000	Direct Material Used (bal. fig.)	$1,57,000
Purchases	$1,83,000	Indirect Material	$17,000
		End. Bal	$52,000
Total	$2,26,000	Total	$2,26,000

Work In proces (WIP)
Apr 30 Balance	$9,900	Cost of Goods Manufactured (Bal. fig)	$2,65,850
Direct Material	$1,57,000
Direct Labor used (100,000-23,000)	$77,000	End. Bal	$20,400
Overhead applied ($77,000*55%)	$42,350
Total	$2,86,250	Total	$2,86,250

Finished Goods (FG)
Apr 30 Balance	$57,000	Cost Of Goods sold (Bal. Fig.)	$2,88,750
Cost of Goods Manufactured	$2,65,850
		End. Bal	$34,100
Total	$3,22,850	Total	$3,22,850

Income Statement (Partial)
Sales	$18,00,000
Less: Cost of Goods sold	$2,88,750
Gross Profit	$15,11,250

Factory Overhead
Indirect Material	$17,000	Overhead applied	$42,350
Indirect Labor	$23,000	Under applied Overhead (Bal. Fig)	$92,150
Other Overhead cost	$94,500
Total	$1,34,500	Total	$1,34,500