Question

Partially completed T-accounts and additional information for Cardinals, Inc., for the month of November appear as follows. Materials Inventory BB (11/1) 43,000 133,000 102,000 Cost of Goods Sold Work-In-Process Inventory BB (11/1) 73,000 Labor 96,000 Manufacturing Overhead Control Finished Goods Inventory_ BB (11/1) 93,000 193,000 133,000 Applied Manufacturing Overhead 91,000 Additional information for November follows: • Labor wage rate was $30 per hour. • Manufacturing overhead is applied at $24 per direct labor-hour. . During the month, sales revenue was $335,000, and selling and administrative costs were $61,000. • This company has no indirect materials or supplies. Required: a. What cost amount of direct materials was issued to production during November? b. How much manufacturing overhead was applied to products during November? c. What was the cost of products completed during November? d. What was the balance of the Work-in-Process Inventory account at the end of November? e. What was the over- or underapplied manufacturing overhead for November? f. What was the operating profit (loss) for November? 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

Answer 1

a. Cost of Direct Material issued to production = $102000 (i.e. credit in Materials inventory)

b. Direct Labor hours = $96000 / $30 = 3200 hours
Manufacturing overhead applied = 3200 x $24 = $76800

c. Cost of Products completed = $193000 (i.e. Debit in Finished goods inventory)

d. Work in Process ending balance = $73000 + $102000 + $96000 + $76800 - $193000 = $154800

e. Since Actual manufacturing overhead is higher than applied overhead, overhead is underapplied by $14200

f. Operating Profit = Sales revenue - cost of goods sold - Selling expenses
= $335000 - ($133000+$14200) - $61000 = $126800