April 30 May 31 Inventories
Raw materials $37,000 $42,000
Work in process 9,800 18,600
Finished goods 58,000 34,900
Activities and information for May
Raw materials purchases (paid with cash) 189,000
Factory payroll (paid with cash) 150,000
Factory overhead
Indirect materials 7,000
Indirect labor 34,500
Other overhead costs 101,000
Sales (received in cash) 1,200,000
Pre-determined 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.

1. Cost of direct materials used

= $177,000

2. Cost of direct labor used

= $150,000

3. Cost of goods manufactured

= $400,700

4. Cost of goods sold

= $423,800

5. Gross profit

= $776,200

6. Overapplied or underapplied overhead

= $60,000 Underapplied

Explanation:

a) Data and Calculations:

Inventories

Raw materials $37,000 $42,000

Work in process 9,800 18,600

Finished goods 58,000 34,900

Activities and information for May

Raw materials purchases (paid with cash) 189,000

Factory payroll (paid with cash) 150,000

Factory overhead

Indirect materials 7,000

Indirect labor 34,500

Other overhead costs 101,000

Sales (received in cash) 1,200,000

Predetermined overhead rate based on direct labor cost = 55%

T-accounts:

Raw materials

Account Titles            Debit       Credit

Beginning balance $37,000

Cash                        189,000

Factory overhead                        $7,000

Work in process                         177,000

Ending balance                        $42,000

Totals                   $226,000 $226,000

Work in process

Account Titles            Debit       Credit

Beginning balance  $9,800

Direct materials      177,000

Direct labor            150,000

Applied overhead   82,500

Finished goods                      $400,700

Ending balance                         $18,600

Totals                  $419,300    $419,300

Finished goods

Account Titles            Debit       Credit

Beginning balance  $58,000

Work in process      400,700

Cost of goods sold                  $423,800

Ending balance                          $34,900

Totals                    $458,700   $458,700

Factory overhead

Account Titles            Debit       Credit

Indirect materials       $7,000

Indirect labor              34,500

Other costs               101,000

Work in process                        $82,500 (55% of direct labor)

Under-applied overhead            60,000

Total                      $142,500   $142,500

Sales (received in cash) 1,200,000

Cost of goods sold           423,800

Gross profit =                    776,200

statement of owner"s equity;