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 $ 33,000 $ 32,000 Work in process 9,400 20,800 Finished goods 50,000 34,600 Activities and information for May Raw materials purchases (paid with cash) 171,000 Factory payroll (paid with cash) 250,000 Factory overhead Indirect materials 12,000 Indirect labor 57,500 Other overhead costs 110,000 Sales (received in cash) 1,700,000 Predetermined overhead rate based on direct labor cost 55 % Exercise 19-7 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. *Do not consider any underapplied or overapplied overhead.

Lock-Tite Company

Cost of direct materials used = $160,000

Cost of direct labor used = $192,500 ($250,000 - $57,500)

Cost of goods manufactured = $446,975

Cost of goods sold = $462,375

* Gross profit = $1,237,625

Overapplied or underapplied overhead = $73,625

*Do not consider any underapplied or overapplied overhead.

Explanation:

a) Data and Calculations:

Inventories            April 30      May 31

Raw materials    $ 33,000   $ 32,000

Work in process      9,400      20,800

Finished goods    50,000       34,600

Activities and information for May:

Raw materials purchases (paid with cash) 171,000

Factory payroll (paid with cash) 250,000

Factory overhead:

Indirect materials 12,000

Indirect labor 57,500

Other overhead costs 110,000

Sales (received in cash) 1,700,000

Predetermined overhead rate based on direct labor cost 55 %

T-accounts:

Raw materials

Date       Account Titles         Debit        Credit

April 30 Inventory balance $ 33,000

May       Cash                         171,000

May       Factory overhead                     $12,000

May       Work in process                       160,000

May 31  Inventory balance                   $ 32,000

Work in process

Date       Account Titles         Debit        Credit

April 30 Inventory balance   $ 9,400

May       Raw materials         160,000

             Factory payroll       192,500

             Factory overhead  105,875

             Finished goods                    $446,975

May 31  Inventory balance                 $ 20,800

Finished goods

Date       Account Titles         Debit        Credit

April 30 Inventory balance $ 50,000

May       Work in process      446,975

May       Cost of goods sold                 $462,375

May 31  Inventory balance                    $ 34,600

Factory overhead

Date       Account Titles         Debit        Credit

May        Raw materials         12,000

              Payroll                    57,500

              Other expenses   110,000

May        Work in process                   $105,875

May        Underapplied overhead          73,625

Sales revenue  = $1,700,000

Cost of goods sold (462,375)

Gross profit         $1,237,625

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