Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 4

Assigning Costs to Jobs

Partially completed T-accounts and additional information for Cardinals, Inc., for the month of November follow.

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 $270,000, and selling and administrative costs were $48,000.

• This company has no indirect materials or supplies.

Required

a. What cost amount of direct materials was issued to production during November?

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b. How much manufacturing overhead was applied to products during November?

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c. What was the cost of products completed during November?

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d. What was the balance of the Work-in-Process Inventory account at the end of November?

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e. What was the over- or underapplied manufacturing overhead for November?

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f. What was the operating profit for November? Any over- or underapplied overhead is written off to Cost of Goods Sold.

Step 1 of 8

Company C costs ae calculated as under:

a.

Direct material issued to production is calculated as under:

Opening Material Inventory was $30,000

Material purchased in the month of November was $120,000

Material issued to Work in process was $96,000 (Already shown in T-account)

As there are no indirect supplies so the closing inventory in Material Inventory account is $54,000.

Materials Inventory
Date	Particulars	Amount	Date	Particulars	Amount
BB (11/1)	Opening	30,000
	Purchased	120,000		Issued to WIP	96,000
EB		54,000