Partially completed T-accounts and additional information for Pine Ridge Corpora

ID: 2342133 • Letter: P

Question

Partially completed T-accounts and additional information for Pine Ridge Corporation for the month of February follow:

Additional information for February follows:

Labor wage rate was $28 per hour.

During the month, sales revenue was $601,200, and selling and administrative costs were $103,700.

This company has no indirect materials or supplies.

The company applies manufacturing overhead on the basis of direct labor costs.

Required:

a. What was the balance of the Work-in-Process Inventory account at the beginning of June?

b. What was the operating profit (or loss) for June?

Materials Inventory BB (2/1) 57,400 227,800 189,900

Solution a:

Balance of the Work-in-Process Inventory account at the beginning of June = $101,600

Solution b:

Unadjusted cost of goods sold = Credit to finished goods inventory = $250,100

Underapplied overhead = $156,200 - $132,060 = $24,140

Adjusted cost of goods sold = Unadjusted COGS + Underapplied overhead

= $250,100 + $24,140 = $274,240

Sales revenue = $601,200

Gross Profit = Sales revenue - COGS = $601,200 - $274,240 = $326,960

Operating profit = Gross profit - Selling and administrative cost = $326,960 - $103,700 = $223,260