Question

Selected information from the Blake Corporation accounting records for June follows. ntory BB (6/1) Materials Inventory 89,000 461,000 416,000 Work-In-Process Inventory Labor 510,000 EB (6/30) 540,000 Finished Goods Inventory BB (6/1) 291,000 836,000 833,000 Cost of Goods Sold Manufacturing Overhead Control 316,000 316,000 24,000 Applied Manufacturing Overhead 340,000 316,000 24,000 Additional information for June follows: • Labor wage rate was $30 per hour. • During the month, sales revenue was $1,029,000, and selling and administrative costs were $236,000 • This company has no indirect materials or supplies. • The company applies manufacturing overhead on the basis of direct labor-hours. Required: 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 during June? e. What was the balance of the Work-in-Process Inventory account at the beginning of June? f. What was the operating profit (or loss) for June? Any over- or underapplied overhead is written off to Cost of Goods Sold. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E Required F What was the cost of direct materials purchased in June? Direct materials Required A Required BΣ.

Answer 1

a.

Direct materials = $461,000

b.

Over applied manufacturing overhead = $340,000-316,000 = $24,000

c.

Manufacturing overhead application rate:

Direct labor hours = $510,000/$30 = 17,000 hours

Manufacturing overhead application rate = $340,000/17,000 = $20 per direct labor hour

d.

Cost of product completed during June = $836,000

e.

Beginning WIP inventory = Cost of goods manufactured+Ending WIP inventory-Total manufacturing cost

Beginning WIP inventory = $836,000+540,000-1,266,000 (416,000+510,000+340,000) = $110,000

f.

Operating profit (loss) = Sales - Cost of goods sold - Selling and administrative costs

Operating profit (loss) = $1,029,000 - 809,000 (833,000-24,000) - 236,000 = $(16,000)

Yes overapplied overhead $16,000 has been written off to Cost of goods sold.