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C7-20 and 7-27 solutions

# C7-20 and 7-27 solutions - 7-27 Applying Overhead Using a...

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7-20 Assigning Costs to Jobs: Cardinals, Inc. a. \$96,000, the credit side of the Materials Inventory account. b. \$72,000. Direct labor ............................................................ \$90,000 Labor rate .............................................................. \$30 per hour Direct labor-hours .................................................. \$90,000 ÷ \$30 = 3,000 hours Manufacturing overhead applied ........................... 3,000 x \$24 = \$72,000 c. \$180,000, the debit addition to the Finished Goods Inventory account. d. \$138,000. BB + TI – TO = EB EB = \$60,000 + (\$96,000 + \$90,000 + \$72,000) – \$180,000 EB = \$138,000 e. \$6,000 (underapplied) = \$78,000 – \$72,000. f. \$96,000. Sales ................................ \$270,000 Cost of Goods Sold a ....... \$126,000 S&A costs ........................ 48,000 174,000 Operating profit ................ \$96,000 a The credit from Finished Goods Inventory for \$120,000 plus \$6,000 under-applied overhead.
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Unformatted text preview: 7-27 Applying Overhead Using a Predetermined Rate: Mary’s Landscaping. Since Job No. 3318 is the only job in the account, the ending balance of the account must equal the total cost of the job. We can find the account’s ending balance using the basic cost equation: BB + TI – TO = EB EB = \$ 6,250 + (\$40,500 + \$27,000 + \$21,600) – \$81,000 EB = \$14,350 We are told that direct labor for Job No. 3318 is \$3,375 and that overhead is applied at a rate of 80% of direct labor cost. So, Factory overhead = 80% x \$3,375 = \$2,700 To solve for direct materials we set up the cost equation, Total cost = direct materials + direct labor + factory overhead \$14,350 = direct materials + \$3,375 + \$2,700 Direct materials = \$14,350 – \$3,375 – \$2,700 Direct materials = \$8,275...
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