The following events took place for Fed Inc. during October 2012, the first mont
ID: 2366271 • Letter: T
Question
The following events took place for Fed Inc. during October 2012, the first month of operations as a producer of road bikes: Purchased $427,000 of materials. Used $367,500 of direct materials in production. Incurred $315,000 of direct labor wages. Applied factory overhead at a rate of 80% of direct labor cost. Transferred $892,500 of work in process to finished goods. Sold goods with cost of $848,750. Sold goods for $1,500,000. Incurred $367,500 of selling expenses. Incurred $131,950 of administrative expenses. a. Prepare the October income statement for Fed. Assume that Fed uses the perpetual inventory method. b. Determine the inventory balances at the end of the first month of operations.Explanation / Answer
The following events took place for Fed Inc. during October 2012, the first month of operations as a producer of road bikes: Purchased $427,000 of materials. Used $367,500 of direct materials in production. Incurred $315,000 of direct labor wages. Applied factory overhead at a rate of 80% of direct labor cost. Transferred $892,500 of work in process to finished goods. Sold goods with cost of $848,750. Sold goods for $1,500,000. Incurred $367,500 of selling expenses. Incurred $131,950 of administrative expenses. a. Prepare the October income statement for Fed. Assume that Fed uses the perpetual inventory method. b. Determine the inventory balances at the end of the first month of operations.
REFER TO:
books.google.co.in/books?isbn=1111535213
http://infihelp.com/the-following-events-took-place-for-fed-inc-durin.html
www.jiskha.com/display.cgi?id=1332274688
ANSWER:
Revenues less the cost of goods sold equals the gross profit. Gross profit less the selling and administrative expenses equals the income from operations.
b. Determine the inventory balances at the end of the first month of operations.
Materials inventory, October 31 $
Work in process inventory, October 31 $
Finished goods inventory ,October 31
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