The Ryde and Rowe Inc. had the following account balances as of January 1: ¥ Dir

ID: 2488589 • Letter: T

Question

The Ryde and Rowe Inc. had the following account balances as of January 1: ¥ Direct Materials Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 89,200 ¥ Work in Process Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178,400 ¥ Finished Goods Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253,600 ¥ Manufacturing Overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –0– During the month of January, all of the following occurred: ¥ 1. Direct labor costs were $442,000 for 18,000 hours worked. ¥ 2. Direct materials costing $335,750 and indirect materials costing $13,500 were purchased. ¥ 3. Sales commissions of $216,500 were earned by the sales force. ¥ 4. $326,000 worth of direct materials were used in production. ¥ 5. Advertising costs of $36,300 were incurred. ¥ 6. Factory supervisors earned salaries of $22,000. ¥ 7. Indirect labor costs for the month were $23,000. 8. Monthly depreciation on factory equipment was $24,500. 9. Utilities expense of $17,800 was incurred in the factory. 10. Equipment with manufacturing costs of $970,100 were transferred to finished goods. 11. Monthly insurance costs for the factory were $4,200. 12. $5,000 in property taxes on the factory were incurred and paid. 13. Equipment with manufacturing costs of $1,089,000 were sold for $1,550,000 If Ryde and Rowe assigns manufacturing overhead of $84,400, what will be the balances in the Direct Materials, Work in Process, and Finished Goods Inventory accounts at the end of January? b. As of January 31, what will be the balance in the Manufacturing Overhead account? c. What was Ryde and Rowe’s operating income for January

Explanation / Answer

Direct materials inventory, Jan. 1

$89,200

Direct materials purchased

335,750

Less: Direct materials used in production

(326,000)

Direct materials inventory, Jan. 31

$98,950

Work in process inventory, Jan. 1

$178,400

Direct materials used

442,000

Direct labor used

326,000

Manufacturing overhead applied

84,400

Less: Finished goods transferred out

(970,100)

Work in process inventory, Jan. 31

$60,700

Finished goods inventory, Jan. 1

$253,600

Cost of finished goods transferred in

970,1000

Less: Cost of goods sold

(1,089,000)

Finished goods inventory, Jan. 31

$134,700

Manufacturing overhead, Jan. 1

Indirect materials purchased

13,500

Supervisor salaries

22,000

Indirect labor costs

23,000

Depreciation

24,500

Factory utilities

17,800

Factory insurance

4,200

Property taxes on factory

5,000

Less: Manufacturing overhead applied

(84,400)

Manufacturing overhead, Jan. 31

$25,600

Operating income for the month of January:

Revenues

$1,550,000

Cost of goods sold

1,089,000)

Gross profit

461,000

Operating expenses:

Sales commissions

$216,500

Advertising expense

36,300

(220,100)

Operating income

$240,900