Question

Selected information from the Blake Corporation accounting records for June follows: Materials Inventory BB (6/1) 78,000 450,000 405,000 Work-In-Process Inventory Labor 345,000 EB(6/30) 430,000 Finished Goods Inventory BB (6/1) 280,000 825,000 822,000 Cost of Goods Sold 13,000 Manufacturing Overhead Control 240,000 240,000 Applied Manufacturing Overhead 253,000 240,000 13,000 Additional information for June follows: Labor wage rate was $30 per hour. During the month, sales revenue was $1,026,000, and selling and administrative costs were $225,000. This company has no indirect materials or supplies. The company applies manufacturing overhead on the basis of direct labor-hours.
a. What was the cost of direct materials purchased in June?
b. What was the over- or underapplied manufacturing overhead for June?
c. What was the manufacturing overhead application rate in June?
d. What was the cost of products completed in June?
e. What was the balance of the Work-in-Process Inventory account at the beginning of June?
f. What was the operating profit for JuneAny? over- or underapplied overhead is written off to Cost of Goods Sold. (Negative amounts should be indicated by a minus sign.)

Answer 1

Answer:

a) Materials Inventory Purchases 450,000

b) Over applied Manufacturing Overhead $ 13,000

c) Overhead application rate  $19.46

d) Cost of products completed during June= $ 825,000

e) Work-in-Process Inventory account at the beginning of June $ 225,000

f) Operating Loss for June is -$ 8000

Explanation:

Blake Corporation

Cost of Goods Sold Schedule

Materials Inventory Beginning Balance 78,000

Add Materials Inventory Purchases 450,000 (given)

Less Materials Inventory Ending Balance -405,000

Direct Materials Used 123,000

Direct Labor (13,000* 30) = $ 390,000

Add Manufacturing Overheads = $ 253,000

Total Manufacturing Costs = $ 766,000

Add opening Work In Process $ 225,000

Cost of Goods available for manufacture $ 991000

Less Ending Work In Process -$ 166,000

Cost of Goods Manufactured 825000 (given)

Add Opening Finished Goods 280,000

Cost of Goods available for Sale  1105,000

Less Finished Goods Inventory   -283,000

Un adjusted Cost of Goods Sold 822,000 ( given)

Less Over applied Manufacturing Overhead   - (13,000)

Adjusted Cost of Goods Sold $ 809,000

Blake Corporation

Income Statement

Sales $1,026,000

less Cost of Goods Sold 809,000

Gross Profit =  $ 217,000

Less selling and administrative costs  $225,000

Operating Loss -(8000)

a) Materials Inventory Purchases 450,000

b) Applied Overhead = $ 253,000

Actual Overhead = $ 240,000

Over applied Manufacturing Overhead =  Applied Overhead - Actual Overhead= 253,000- 240,000= $ 13,000

c) Overhead application rate = 253,000/13000= $19.46

d) Cost of products completed during June= $ 825,000

e) Work-in-Process Inventory account at the beginning of June $ 225,000

f) Operating Loss for June is -$ 8000