Answer:
The correct answer is D: $1900
Explanation:
Giving the following information:
Sales revenue$ 4,000
Purchases of direct materials$ 400
Direct labor$ 450
Manufacturing overhead $ 620
Operating expenses$ 650
Beginning raw materials inventory$ 200
Ending raw materials inventory$ 180
Beginning work in process inventory$ 320
Ending work in process inventory$ 410
Beginning finished goods inventory$ 250
Ending finished goods inventory$ 200
First, we need to calculate the cost of goods manufactured:
cost of goods manufactured= beginning work in process + direct materials + direct labor + manufacturing overhead - ending work in process
Direct materials= beginning inventory + purchase - ending inventory= 200 + 400 - 180= 420
cost of goods manufactured= 320 + 420 + 450 + 620 - 410= $1400
Now, we can calculate the cost of goods sold:
COGS= beginning finished inventory + cost of goods manufactured - ending finished goods
COGS= 250 + 1400 - 200= 1450
Operating income= sales - COGS - operating expenses
Operating income= 4000 - 1450 - 650= $1900
