7-25

a. $447,000, the debit side of the Materials Inventory account.

b. $10,000 overapplied (the difference between overhead control and overhead
applied).
c. $25/direct-labor hour (= $250,000 Applied ÷ 10,000 [= $350,000 ÷ $35] Direct Labor
Hours).
d. $822,000, the debit addition to the Finished Goods Inventory account.
e.
BB = EB – TI + TO
BB = $400,000 – ($402,000 + $350,000 + $250,000) + $822,000
BB = $220,000

f.
Sales ........................................ $1,020,000
Cost of Goods Solda ................ $809,000
S&A costs ................................ 222,000 1,031,000
Operating profit ........................ ($11,000)

a The credit from Finished Goods Inventory for $819,000 minus $10,000 overapplied
overhead.

7-26.
a. $190,000, the credit side of the Materials Inventory account.
b. $5,000 underapplied (= $155,000 Control – $150,000 Applied).
c. 80% (= $150,000 Applied ÷ $187,500 Direct Labor Cost).
d. $345,000, the debit addition to the Finished Goods Inventory account.
e.
BB + TI – TO = EB
EB = $100,000 + ($190,000 + $187,500 + $150,000) – $345,000
EB = $282,500

f.
Sales ..................................... $600,000
Cost of Goods Solda ............. $256,000
S&A costs ............................. 105,000 361,000
Operating profit ..................... $239,000

a The credit from Finished Goods Inventory for $251,000 plus $5,000 underapplied
overhead.