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After preparing for your managerial accounting exam, you confidently turn to your roommate and declare, I think I've finally figured out how product costs flow

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After preparing for your managerial accounting exam, you confidently turn to your roommate and declare, "I think I've finally figured out how product costs flow through the various accounts and how they are reflected on income statements and balance sheets." Upon hearing this wonderful news, your roommate responds, "Hey, if you really want to test your understanding of product costing, try working a problem my old prof gave me." After rummaging for fifteen minutes through various files, folders, and shelves, your roommate slaps a sheet of paper in front of you and explains that the sheet contains information pertaining to one year of operations for the Lange Manufacturing Company. The sheet contains the following information. Beginning Inventory, Direct Materials Ending Inventory, Direct Materials Direct Materials Used Sales Beginning Inventory, Work in Process Ending Inventory, Work in Process Cost of Goods Manufactured Actual Manufacturing Overhead Selling and Administrative Expenses Beginning Inventory, Finished Goods Ending Inventory, Finished Goods Beginning Balance, Property, Plant& Equipmernt Ending Balance, Property, Plant & Equipment Applied Manufacturing Overhead (80 percent of direct labor cost) 12,500 21,000 195,000 485,000 62,000 82,000 415,000 165,000 82,500 92,000 83,000 255,000 262,000

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