Question

The following events took place for Sorensen Manufacturing Company during January, the first month of its operations as a producer of digital video monitors: Purchased $255,000 of materials. Used $183,600 of direct materials in production. Incurred $459,000 of direct labor wages. Incurred $183,600 of factory overhead. Transferred $775,200 of work in process to finished goods. Sold goods for $1,224,000. Sold goods with a cost of $688,500. Incurred $219,300 of selling expense. Incurred $127,500 of administrative expense. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.a. Prepare the March income statement for Digital Vibe Manufacturing Company. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.b. Determine the inventory balances at the end of the first month of operations.

Answer 1

Answer:

Digital Vibe Manufacturing Company

March Income Statement

Sales                                                                              $1224000

Purchases                                       $255,000

Less Ending Inventory Materials   $71,400

Direct Materials Used in Production  $183,600

Direct Labor Wages                            $459,000

Factory Overhead                                $183,600

Total Manufacturing Costs                  $ 826,200

Less Work In Process Ending Inventory $51,000

Finished Goods                                  $775200

Less F. G ending Inventory               $ 86,700

Cost of Goods Sold                                                     $   688,500  

Gross Profit                                                                   $535500

Less Selling Expenses                                                   $219300

Less Administrative Expenses                                   $127500

Net Profit                                                                       $188700

b.Ending Inventory Materials   $71,400= Material Purchased- Material used

                                                                    =$255,00- $ 183,600= $71,400

Work In Process Ending Inventory $51,000

Total Manufacturing Costs Less Transferred to Finished  Goods=  

$ 826,200 -       $775200= $51,000

F. G ending Inventory               $ 86,700

=   Transferred to Finished  Goods Less Cost of Goods Sold =        $775200-   $   688,500  =  $ 86,700