Question

StorSmart Company makes plastic organizing bins. The company has the following inventory balances at the beginning and end of March: Beginning Inventory Ending Inventory Raw materials $ 29,700 $ 25,600 Work in process 22,400 46,100 Finished goods 78,300 69,800 Additional information for the month of March follows: Raw materials purchases $ 41,600 Indirect materials used 1,200 Direct labor 62,900 Manufacturing overhead applied 36,700 Selling, general, and administrative expenses 24,300 Sales revenue 237,000 Required: 1. Based on the above information, prepare a cost of goods manufactured report. 2. Based on the above information, prepare an income statement for the month of March.

Answer 1

1. Cost of goods Manufactured Report

Beginning raw materials inventory $29,700

Add: Raw materials purchases $41,600

Less: Indirect materials ($1,200)

Less: Ending raw materials inventory ( $25,600)

Direct materials used in production $44,500

Direct labor $62,900

Manufacturing overhead $36,700

Total current manufacturing costs $‭144,100‬

Add: Beginning work in process inventory $22,400

Less: Ending work in process inventory ($46,100)

Cost of goods manufactured $‭120,400‬

2. Income Statement for March

Sales revenue $237,000

Less: Cost of goods sold

Cost of goods manufactured $120,400

Add: Beginning finished goods inventory $78,300

Less: Ending finished goods inventory $69,800

Cost of goods sold ($‭128,900‬)

Gross profit $108,100

Less:

Operating expenses (selling & administrative expenses) ( $24,300 )

Net operating income $83,800