it Problems 6 Help The following information is available for Lock-Tite Company,

Question

it Problems 6 Help The following information is available for Lock-Tite Company, which produces special-order security products and uses a job order costing system. April 3e y 31 Inventories Raw materials Work in process Finished goods $35,00056,000 18, 300 33,500 9,600 60,000 Activities and information for May Raw materials purchases (paid with cash) Factory payroll (paid with cash) Factory overhead 183,000 250,000 Indirect materials Indirect labor other overhead costs 14,000 57, 500 113,000 1,800,00e Sales (received in cash) Predetermined overhead rate based on direct iabor cost 55%

Explanation / Answer

Explanation: 1. Cost of direct materials used     Beginning raw materials inventory 35,000     Plus purchases 183,000     Raw materials available 218,000     Less ending raw materials inventory -56000     Total raw materials used 162,000     Less indirect materials used -14000     Cost of direct materials used 148,000 2. Cost of direct labor used     Total factory payroll 250,000     Less indirect labor -57500     Cost of direct labor used 192,500 3. Cost of goods manufactured     Beginning goods in process inventory 9,600     Plus direct materials 148,000     Plus direct labor 192,500     Plus overhead applied (55%) 105,875     Total cost of goods in process 455,975     Less ending goods in process inventory -18300     Cost of goods manufactured 437,675 4. Cost of goods sold     Beginning finished goods inventory 60,000     Plus: Cost of goods manufactured 437,675     Less ending finished goods inventory -33500     Cost of goods sold 464,175 5 Gross profit     Sales 1,800,000     Cost of goods sold -464,175     Gross profit 1,335,825 6 Overapplied or underapplied overhead     Indirect materials 14,000     Indirect labor 57,500     Other overhead costs 113,000     Total actual overhead incurred 184,500     Overhead applied 105,875    Underapplied overhead 78,625 RawMaterial(RM) RM-April 30 35,000 14000 Indirect Material RM purchases 183,000 148,000 DM Used RM May 31 56,000 Factory Payroll Factory Payroll 250000 57500 Indirect Labor 192,500 DL Used 0 Factory Overhead Indirect Material 14000 105,875 Overhead applied Indirect Labor 57500 Other ovehead costs 113,000 Underappliedoverhead 78,625 Goods in process GIP April 30 9,600 437,675 Cost of goods manufactured DM Used 148,000 DL Used 192,500 Overhead applied 105,875 GIP-May 31 18,300 Finished Goods FG-April 30 60,000 464,175 Cost of goods sold Cost of goods manufactured 437,675 FG May 31 33,500 Income Statement (Partial) Sales 1,800,000 Cost of goods sold -33,500 Gross Profit 1,766,500

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