Question

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

Materials Inventory
BB (6/1)	84,000
	456,000	411,000

Work-In-Process Inventory
Labor	507,500
EB(6/30)	490,000

Finished Goods Inventory
BB (6/1)	286,000
	831,000	828,000

Cost of Goods Sold
		19,000

Manufacturing Overhead Control
	271,000
		271,000

Applied Manufacturing Overhead
		290,000
	271,000
	19,000

Additional information for June follows:

Labor wage rate was $35 per hour.

During the month, sales revenue was $1,019,000, and selling and administrative costs were $231,000.

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 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 materials purchased in june
		456,000
	b)	overhead over applied
		19,000
	c)	overehead application rate			$20	per DLH's
		direct labor hrs * rate = oh applied
		(507500/35)*x             = 290,000
		14500 hrs * rate = 290,000
		hence x (rate)      = 290000/14500
				20	per direct labor hour
	d)	cost of products completed during june
		831,000
	e)	Balance in WIP			67,500
		t-Account
		BB	67,500
		DM	456,000	831,000	finished
		DL	507,500
		OH applied	290,000
		End bal	490,000
	f)	net operating profit (loss)				-21,000
		sales				1,019,000
		less:Adjusted cost of goods sold
			(828000-19000)			809000
		Gross profit				210,000
		less:selling expense				231,000
		net operating loss				-21,000