Question

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
Inventories Raw materials $43,000 $54,000
Work in process 9,100 18,600
Finished goods 54,000 33,200
Activities and information
for May Raw materials purchases
(paid with cash) 193,000
Factory payroll (paid with cash) 150,000
Factory overhead Indirect materials 16,000
Indirect labor 34,500
Other overhead costs 93,000
Sales (received in cash) 1,700,000

Predetermined overhead rate based on direct labor cost 55 % Compute the following amounts for the month of May using T-accounts.

a. Cost of direct materials used.
b. Cost of direct labor used.
c. Cost of goods manufactured.
d. Cost of goods sold.

Answer 1

Lock-Tite Company

a Cost of direct materials used:

= $182,000

b. Cost of direct labor used:

= $150,000

c. Cost of goods manufactured:

= $466,000

d. Cost of goods sold:

= $520,000

Step-by-step explanation:

a) Data and Calculations:

April 30 May 31

Inventories:

Raw materials $43,000 $54,000

Work in process 9,100 18,600

Finished goods 54,000 33,200

Activities and information for May Raw materials purchases

(paid with cash) 193,000

Factory payroll (paid with cash) 150,000

Factory overhead Indirect materials 16,000

Indirect labor 34,500

Other overhead costs 93,000

Total overhead costs = $143,500

Sales (received in cash) 1,700,000

Cost of goods sold 520,000

Gross profit 1,180,000

Raw materials

Account Titles Debit Credit

Beginning balance $43,000

Cash 193,000

WIP 182,000

Ending balance $54,000

Work in process

Account Titles Debit Credit

Beginning balance $9,100

Raw materials 182,000

Factor payroll 150,000

Factory overhead 143,500

Finished Goods 466,000

Ending balance $18,600

Finished goods

Account Titles Debit Credit

Beginning balance $54,000

Work-in-Process 466,000

Cost of Goods Sold 520,000

Ending balance $33,200