Answer:
Beginning Raw Materials 8,000
Purchases 133,000
Ending Raw materials (10,100)
Used into production 130,900
Beginning WIP 5,400
cost added 416,900
total cost 422,300
ending WIP (20,400)
COGM 401,900
Beginning FG 70,000
COGM 401,900
goods available 471,900
ending FG (25,500)
COGG 446,400
Overhead 18,000 udnerapplied
Sales 652,000
COGM (464,400) - (446,400 + 18,000)
Gross Profit 187, 600
S&A (145,000)
Net income 42,600
Explanation:
We work the following reasoning:
the beginning inventory are the materials at hand at the beginning then we add up the purchases and compare with ending ivnentory. The difference was used into production.
Same thinking applpies to how to calculate for cost of goods manufactured and cost of goods sold.
side calculation:
cost added during the period:
mateirals used + direct labor + applied overhead
Overhead:
actual 223,000
applies 205,000
as the cost were higher we will adjust to increase overhead by 18,000 It was underapplied
This will increase the COGS in the income statement.
<u>Net income: </u>
we will calculate the net income by subtracting the COGS and the expenses from the sales revenues.
