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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 $ $30,000 9,400 50,000 49,000 19,200 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 170,000 200,000 16 , ᎾᎾᎾ 46,000 107,000 1,900,000 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.

Answer 1

1
	Raw materials (RM)						Work in Process (WIP)
RM-April 30	30000					WIP-April 30	9400
RM purchases	170000					DM used	135000
		16000	Indirect materials			DL used	154000
		135000	DM used			Overhead applied	84700	363900	Cost of goods manuf.
RM-May 31	49000					WIP-May 31	19200
	Finished goods (FG)						Factory Overhead
FG-April 30	50000					Indirect materials	16000	84700	Overhead applied
Cost of goods manuf.	363900					Indirect labor	46000
		379500	Cost of goods sold			Other overhead costs	107000
FG-May 31	34400
						Underapplied OH	84300
Income Statement (Partial)
Sales	1900000
Cost of goods sold	379500
Gross Profit	1520500

2
General Journal	Debit	Credit
Raw materials inventory	170000
Cash		170000
Work in Process inventory	135000
Raw materials inventory		135000
Factory overhead	16000
Raw materials inventory		16000

3
General Journal	Debit	Credit
Work in Process inventory	154000		=200000-46000
Factory wages payable		154000
Factory overhead	46000
Factory wages payable		46000
Factory wages payable	200000
Cash		200000

4
General Journal	Debit	Credit
Factory overhead	107000
Other accounts		107000
Work in Process inventory	84700		=154000*55%
Factory overhead		84700

5
Factory overhead
Actual overhead	169000	84700	Applied overhead
Underapplied overhead	84300
General Journal	Debit	Credit
Cost of goods sold	84300
Factory overhead		84300

Workings:
Indirect materials	16000
Indirect labor	46000
Other overhead costs	107000
Actual overhead	169000
Direct labor costs	154000
X Overhead rate	55%
Applied overhead	84700