Question

NOT SURE HOW TO DO AS YOU REQUESTED

Selected information from the Blake Corporation accounting records for June follows. (Materials Inventory BB (6/1) 82,000 454,000 / 409,000) (Work-In-Process Inventory Labor 337,500 EB(6/30) 470,000) (Finished Goods Inventory BB (6/1) 284,000 829,000 /826,000 ) (Cost of Goods Sold /17,000) (Manufacturing Overhead Control 280,000 /280,000) (Applied Manufacturing Overhead 297,000/ 280,000 17,000 )

Additional information for June follows: Labor wage rate was $25 per hour.

During the month, sales revenue was $1,015,000, and selling and administrative costs were $229,000.

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.

Answer 1

a) Cost of direct materials purchased in June $454,000 [Debit entry in Inventory T-Account] b) Mfg. overhead applied in June $297,000 (Credit entry in Applied Mfg. overhead T-account] Actual mfg. overhead costs incurred in June $280,000 (Debit entry in Applied Mfg. overhead T-Account] Over-applied factory overhead cost in June $17,000 ($297000 - $280000] (It is over-applied because applied Mfg. OH is more than Actual Mfg. OH incurred) c) Direct labor cost recorded in June Direct labor wages rate per hour Direct labor hours (DLHS) used in June Mfg. overhead applied in June Mfg. overhead application rate in June per DLH $337,500 $25 13,500 ($337500 / $25] $297,000 (Credit entry in Applied Mfg. overhead T-account] $22 ($297000 / 13500 DLHs] d) Cost of products completed during June $829,000 (Debit entry in Finished Goods T-Account] e) $829,000 (Debit entry in Finished Goods T-Account] Cost of products completed during June Less: Less: Cost of direct materials used in the production Less: Cost of direct labor used in the production Less: Mfg. overhead applied in June Add: Ending balance of WIP inventory account Balance of WIP Inventory account at beginning of June $409,000 (Credit entry in Inventory T-Account] $337,500 (Debit entry in Work-in-Process T-Account] -$297,000 (Credit entry in Applied Mfg. overhead T-account] $470,000 E/B] entry in Work-in-Process T-Account] $255,500

f) Sale revenue Unadjusted cost of goods sold Less: Overhead applied cost of goods sold Adjusted cost of goods sold Gross profit Less: Selling and administrative costs Operating profit (or loss) for June $1,015,000 $826,000 [Credit entry in Finished Goods T-Account] $17,000 $809,000 $206,000 $229,000 ($23,000)