Question

Selected information from the Blake Corporation accounting records for June follows:

Materials Inventory
BB (6/1)	95,000
	467,000	422,000

Work-In-Process Inventory
Labor	400,000
EB(6/30)	600,000

Finished Goods Inventory
BB (6/1)	297,000
	842,000	839,000

Cost of Goods Sold
		30,000

Manufacturing Overhead Control
	370,000
		370,000

Applied Manufacturing Overhead
		400,000
	370,000
	30,000

Additional information for June follows:

• Labor wage rate was $20 per hour.
• During the month, sales revenue was $1,041,000, and selling and administrative costs were $242,000.
• 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? (Negative amounts should be indicated by a minus sign.)

Answer 1

a. Direct Material purchase:- $467000

b.Overhead applied Overhead :- $30000

c. Manufacturing Overhead Application Rate:-

Estimated Overhead:- 400000

Labour Hour :$400000/20= 2000 Hour

Overhead Application Rate:- 400000/2000=$20/Hour

d: Cost of Product completed :- $842000

e. WIP Beginning Balance
	Amount		Amount
Opening WIP ( BF)	$2,20,000	Finished Goods Inventory	$8,42,000
Material inventory	$4,22,000	Ending WIP	$6,00,000
Labour	$4,00,000
Applied OH	$4,00,000
	$14,42,000		$14,42,000
Hence Opening WIP:- $220000

f. Income statement
Sales	$10,41,000
Less: Cost of Goods Sold	$8,09,000
Less: Selling & Administrative expense	$2,42,000
Net Operating Loss	-$10,000

W/ Note:Cost of Goods Sold
	Amount		Amount
Fiished Goods Inventory	$8,39,000	Applied OH	$30,000
		Income Summary	$8,09,000
	$8,39,000		$8,39,000