The following information is available for Lock-Safe Company, which produces special-order security products and uses a job order cost accounting system.

The following information is available for Lock-Safe Company, which produces special-order security products and uses a job order cost accounting system.

 

	April 30		May 31
Inventories
Raw materials	$	39,000	$	46,000
Goods in process		11,300		18,500
Finished goods		61,000		33,800
Activities and information for May
Raw materials purchases (paid with cash)				193,000
Factory payroll (paid with cash)				410,000
Factory overhead
Indirect materials				12,000
Indirect labor				72,000
Other overhead costs				96,000
Sales (received in cash)				1,250,000
Predetermined overhead rate based on direct labor cost				65	%

 

1.	Raw materials purchases for cash.
2.	Direct materials usage.
3.	Indirect materials usage.

Prepare journal entries for the above events for the month of May.

Explanation: 2. Beginning raw materials (39,000) + Raw materials purchased (193,000) - Indirect materials used (12,000) - Ending raw materials (46,000) = $174,000

The following information is available for Lock-Safe Company, which produces special-order security products and uses a job order cost accounting system.

The following information is available for Lock-Safe Company, which produces special-order security products and uses a job order cost accounting system.

 

	April 30		May 31
Inventories
Raw materials	$	34,000	$	51,000
Goods in process		9,500		20,700
Finished goods		67,000		33,600
Activities and information for May
Raw materials purchases (paid with cash)				172,000
Factory payroll (paid with cash)				210,000
Factory overhead
Indirect materials				10,000
Indirect labor				74,000
Other overhead costs				99,000
Sales (received in cash)				1,100,000
Predetermined overhead rate based on direct labor cost				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.
6.	Overapplied or underapplied overhead.

 

*Do not consider any underapplied or overapplied overhead. Explanation:            1.  Cost of direct materials used             Beginning raw materials inventory $ 34,000         Plus purchases   172,000             Raw materials available   206,000         Less ending raw materials inventory   (51,000 )           Total raw materials used   155,000         Less indirect materials used   (10,000 )           Cost of direct materials used $ 145,000                  2.  Cost of direct labor used             Total factory payroll $ 210,000         Less indirect labor   (74,000 )           Cost of direct labor used $ 136,000                  3.  Cost of goods manufactured             Beginning goods in process inventory $ 9,500         Plus direct materials   145,000         Plus direct labor   136,000         Plus overhead applied (55%)   74,800             Total cost of goods in process   365,300         Less ending goods in process inventory   (20,700 )           Cost of goods manufactured $ 344,600                  4.  Cost of goods sold             Beginning finished goods inventory $ 67,000         Plus: Cost of goods manufactured   344,600         Less ending finished goods inventory   (33,600 )           Cost of goods sold $ 378,000                  5.  Gross profit             Sales $ 1,100,000         Cost of goods sold   (378,000 )           Gross profit $ 722,000                  6.  Overapplied or underapplied overhead             Indirect materials $ 10,000         Indirect labor   74,000         Other overhead costs   99,000             Total actual overhead incurred   183,000         Overhead applied   74,800            Underapplied overhead $ 108,200

In December 2012, Shire Computer’s management establishes the year 2013 predetermined overhead rate based on direct labor cost.

In December 2012, Shire Computer’s management establishes the year 2013 predetermined overhead rate based on direct labor cost. The information used in setting this rate includes estimates that the company will incur $826,800 of overhead costs and $520,000 of direct labor cost in year 2013. During March 2013, Shire began and completed Job No. 13-56.

1.

What is the predetermined overhead rate for year 2013? 2. Use the information on the following job cost sheet. (Round your answer to the nearest dollar amount.) JOB COST SHEET   Customer’s Name   Keiser Co. Job No. 13-56           Job Description   5 plasma monitors—61 inch           Direct Materials   Direct Labor   Overhead Costs Applied             Date Requisition No. Amount   Time-Ticket No. Amount   Rate Amount     Mar. 8 4-129 $ 4,000     T-306 $ 620             Mar. 11 4-142   6,900     T-432   1,290             Mar. 18 4-167   3,500     T-456   1,280                           Totals                                       Determine the total cost of the job. Total cost of the job $22,662

Explanation:

2.

Direct materials	$	14,400
Direct labor		3,190
Overhead ($3,190 × 159%)		5,072
Total cost of Job No. 13-56	$	22,662