Use the following information for questions 7-8 following data from the just com

Question

Use the following information for questions 7-8 following data from the just complcted year are taken from the accounting records of Mason Company. Please use the information below Sales Direct Labor Cost Raw Materials Purchased Selling Expense Administrative Expense Manufacturing Overhead Applied to Work in $524,000 $70,000 $118,000 $140,000 563,000 Process $90,000 Actual Manufacturing Overhead Cost $80,000 End of Year Beginning of Inventories Raw Materials Work in Process Finished Goods Year $7,000$15,000 $5,000 $20,000 Additional information: For the year, the cost of goods manufactured totaled $275,000; the unadjusted cost of goods sold totaled $260,000. The company's overapplied or underapplied overhead is closed entirely to Cost of Goods Sold 7. How much was the Company's Work in Process inventory balance at the beginning of the year? A. $2,000 B. $10,000 C. $15,000 D. $20,000 E. None of the above

Explanation / Answer

7. Answer: Option B. $10,000

Cost of goods manufactured $275,000 = Direct materials $110,000 ($7,000 + $118,000 - $15,000) + Direct labor $70,000 + Overheads applied $90,000 + Beginning work in process – Ending work in process $5,000

$275,000 = $265,000 + Beginning work in process

Beginning work in process = $275,000 - $265,000 = $10,000

8. Answer: Option C. $250,000

Overheads incurred $80,000 – Overheads applied $90,000 = Overheads overapplied $10,000

Unadjusted cost of goods sold = $260,000

Adjusted cost of goods sold = Unadjusted cost of goods sold $260,000 – Overapplied overheads $10,000 = $250,000

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