Question

The following data (in thousands of dollars) have been taken from the accounting records of Karmint Corporation for the just completed year: sales - $830; raw materials inventory, beginning - $50, raw materials inventory, ending - $40; purchases of raw materials - $150; direct labor - $140: manufacturing overhead - $160; administrative expenses - $120; selling expenses - $150; work in process inventory, beginning - $30; work in process inventory, ending - $50; finished goods inventory, beginning - $80; finished goods inventory, ending - $100.The net operating income for the year (in thousand of dollars) was:A) $140.B) $170.C) $110.D) $410.

Answer 1

Answer:

The correct answer is: A= $140

Explanation:

Giving the following information:

sales - $830.

raw materials inventory, beginning - $50

raw materials inventory, ending - $40

purchases of raw materials - $150

direct labor - $140

manufacturing overhead - $160

administrative expenses - $120

selling expenses - $150

work in process inventory, beginning - $30

work in process inventory, ending - $50

finished goods inventory, beginning - $80

finished goods inventory, ending - $100.

First, we need to find the cost of goods manufactured.

Cost of goods manufactured= beginning work in process + direct materials + direct labor + manufacturing overhead - ending direct material

Cost of goods manufactured= 30 + (50 + 150 - 40) + 140 + 160 - 50

Cost of goods manufactured= $440

Now, we can calculate the cost of goods sold:

COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory= 80 + 440 - 100= $420

Operating income= sales - cogs - administrative expenses - selling expenses= 830 - 420 - 120 - 150= $140