Exercise 7-24 Assigning Costs to Jobs (LO 7-2, 3) Partially completed T-accounts

Question

Exercise 7-24 Assigning Costs to Jobs (LO 7-2, 3) Partially completed T-accounts and additional information for Cardinals, Inc., for the month of November appear next: Materials Inventory Work-In-Process Inventory BB 11/1 60,000 Labor 90,000 120,000 96,000 Finished Goods Inventory Cost of Goods Sold BB (111 80,000 180,000 120,000 Manufacturing Overhead Control Applied Manufacturing Overhead 78,000 Additional information for November follows: Labor wage rate was $30 per hour. Manufacturing overhead is applied at $24 per direct labor-hour. Manufacturing overhead is applied at $24 per direct labor-hour. During the month, sales revenue was $270,000, and selling and administrative costs were $48,000. This company has no indirect materials or supplies.

Explanation / Answer

Work in process inventory BB 60,000 finished goods 180,000 direct materials 96,000 Direct labor 90000 overhead applied 72,000 End bal 138,000 Direct labor hours = 90000/30 3000 overhead applied = 3000hrs*$24 per hr 72000 overhead under applied = 78000-72000=$6,000 Cost of goods sold finished goods 120,000 underapplied OH 6,000 End bal 126,000 f) operating profit sales 270,000 less cost of goods sold 126,000 Gross profit 144,000 less Selling and adm expense 48,000 operating profit 96,000 answer

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