Question

Required information [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 $ $46,000 9,500 70,000 44,000 18,500 34,400 Inventories Raw materials Work in process Finished goods Activities and information for May Raw materials purchases (paid with cash) Factory payroll (paid with cash) Factory overhead Indirect materials Indirect labor Other overhead costs Sales (received in cash) Predetermined overhead rate based on direct labor cost 193,000 150,00 11,000 34,500 105,000 1,800,000 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.

Answer 1

1. Cost of Direct Materials Used = $ 195,000

2. Direct Labour used = $ 150,000

3. Cost of Goods Manufactured = $ 486,500

4. Cost of Goods Sold = $ 522,100

5. Gross Profit = $ 1,277,900

6. Over Applied or Under applied overhead

Pre determind overhead = ($150,000x55%) = $ 82,500

Actual overhead incurred = $ 150,500

Under applied overhead = (150,500-82,500) = $ 68,000

Raw Materials		Work in prograss
Particulars	Amount	Particulars	Amount		Particulars	Amount	Particulars	Amount
To Balance b/d	46,000				To Balance b/d	9,500
To Cash	193,000				To Raw Materials	195,000
		By Work in prograss	195,000		To Factory overhead	150,500
					To direct labour	150,000	By Finished Goods	486,500
		Bybalance c/d	44,000				Bybalance c/d	18,500
	239,000		239,000			505,000		505,000
Finished Goods		Factory Overhead
Particulars	Amount	Particulars	Amount		Particulars	Amount	Particulars	Amount
To Balance b/d	70,000
To Work in prograss	486,500				To Indirect Material	11,000
		By Cost of goods sold	522,100		To Indirect Labour	34,500
					To Other overhead cost	105,000	By Work in prograss	150,500
		Bybalance c/d	34,400
	556,500		556,500			150,500		150,500
Direct Labour
Particulars	Amount	Particulars	Amount
To Cash	150,000
		By Work in prograss	150,000
	150,000		150,000

Income Statement (partial)
Particulars	Amount
Sales	1,800,000
Less : Cost of Goods Sold	522,100
Gross Profit	1,277,900