Required information Use the following information to answer questions [The foll

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.

Exercise 15-7 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.

  

April 30 May 31 Inventories Raw materials $ 31,000 $ 30,000 Work in process 9,500 18,200 Finished goods 54,000 34,000 Activities and information for May Raw materials purchases (paid with cash) 197,000 Factory payroll (paid with cash) 200,000 Factory overhead Indirect materials 17,000 Indirect labor 46,000 Other overhead costs 112,500 Sales (received in cash) 2,000,000 Predetermined overhead rate based on direct labor cost 55 %

Explanation / Answer

Question - 1

Cost of Raw material used = 181,000

Question - 2

Cost of direct labor used. = 154,000

Question - 3

Cost of goods manufactured = 411,000

Cost of goods sold ( unadjusted ) = 431,000

Question - 5

Under applied OH = 90800

Question - 4

Gross profit, can be determined on the basis of Unadjusted cost of goods sold. But general practice is to use adjusted cost of goods sold after adding underapplied OH to it.

Cost of goods sold ( adjusted ) = 431000 + 90800 = 521800

Beginning Bal 31000 17000 Factory OH Cash 197000 181000 Work in Process (DM Used ) Ending Balance 30000

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