The following data (in thousands of dollars) have been taken from the accounting
ID: 2381195 • Letter: T
Question
The following data (in thousands of dollars) have been taken from the accounting records of Karlana Corporation for the just-completed year.
$910
$80
$20
$100
$130
$200
$160
$140
$40
$10
$130
$150
$910
Raw materials, inventory, beginning$80
Raw materials, inventory, ending$20
Purchases of raw materials$100
Direct labor$130
Manufacturing overhead$200
Administrative expenses$160
Selling expenses$140
Work in process inventory, beginning$40
Work in process inventory, ending$10
Finished goods inventory, beginning$130
Finished goods inventory, ending$150
Explanation / Answer
Direct Materials:
Raw materials, beginning
80
Plus Purchases of raw materials
100
Less raw materials, ending
20
Equals Direct materials used
160
Plus Direct Labor
130
Plus Manufacturing overhead
200
Equal Manufacturing costs incurred
490
Plus beginning WIP
40
Less ending WIP
10
Equals cost of goods manufactured
520
Plus beginning finished goods
130
Less ending finished goods
150
Equals cost of goods sold
500
Sales
910
Less cost of goods sold
500
Equals gross profit
410
Less Selling expenses
140
Less admin expenses
160
Equals Net operating income
110
Answer: C, $110
Direct Materials:
Raw materials, beginning
80
Plus Purchases of raw materials
100
Less raw materials, ending
20
Equals Direct materials used
160
Plus Direct Labor
130
Plus Manufacturing overhead
200
Equal Manufacturing costs incurred
490
Plus beginning WIP
40
Less ending WIP
10
Equals cost of goods manufactured
520
Plus beginning finished goods
130
Less ending finished goods
150
Equals cost of goods sold
500
Sales
910
Less cost of goods sold
500
Equals gross profit
410
Less Selling expenses
140
Less admin expenses
160
Equals Net operating income
110
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