The following events took place for Chi-Lite Inc. during June 2016, the first mo

Question

The following events took place for Chi-Lite Inc. during June 2016, the first month of operations as a producer of road bikes:
• Purchased $396,010 of materials.
• Used $340,050 of direct materials in production.
• Incurred $294,400 of direct labor wages.
• Applied factory overhead at a rate of 76% of direct labor cost.
• Transferred $812,120 of work in process to finished goods.
• Sold goods with a cost of $791,220.
• Sold goods for $1,404,390.
• Incurred $316,650 of selling expenses.
• Incurred $126,730 of administrative expenses.

Required: A. Prepare the June income statement for Chi-Lite. Assume that Chi-Lite uses the perpetual inventory method. Refer to the list of Labels and Amount Descriptions 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.

B. Determine the inventory balances at the end of the first month of operations.

Work in process inventory, June 30

Explanation / Answer

A Income Statement $ Sales 1404390 Less Cost of production of Goods Sold 791220 Gross Profit 613170 Less Administrative Expenses 126730 " Selling Expenses 316650 443380 NET INCOME 169790 B Materials Inventory June 30 55960 Work in process Inventory June 30 46074 Finished Goods Inventory June 30 20900 Workings Materials Purchased 396010 Less Closing stock of Materials(396010-340050) 55960 Materials Consumed 340050 Add Direct Labor 294400 Prime Cost 634450 Add Factory Overheads(294400 x 76%) 223744 Factory Cost 858194 Less Closing Work in process(858194-812120) 46074 Cost of Production 812120 Less Closing stock of Finished Goods(812120-791220) 20900 Cost of production of Goods Sold 791220

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.