Case 1 2 Direct materials used $7,590 $ Direct labor 5,130 7,850 Manufacturing o
ID: 2500313 • Letter: C
Question
Case
1
2
Direct materials used
$7,590
$
Direct labor
5,130
7,850
Manufacturing overhead
8,120
3,520
Total manufacturing costs
17,940
Beginning work in process inventory
1,900
Ending work in process inventory
2,950
Sales revenue
24,370
Sales discounts
2,160
1,560
Cost of goods manufactured
16,650
22,100
Beginning finished goods inventory
3,950
Goods available for sale
18,060
Cost of goods sold
Ending finished goods inventory
3,210
2,040
Gross profit
6,980
Operating expenses
2,600
Net income
Case
1
2
Direct materials used
$7,590
$
Direct labor
5,130
7,850
Manufacturing overhead
8,120
3,520
Total manufacturing costs
17,940
Beginning work in process inventory
1,900
Ending work in process inventory
2,950
Sales revenue
24,370
Sales discounts
2,160
1,560
Cost of goods manufactured
16,650
22,100
Beginning finished goods inventory
3,950
Goods available for sale
18,060
Cost of goods sold
Ending finished goods inventory
3,210
2,040
Gross profit
6,980
Operating expenses
2,600
Net income
Explanation / Answer
Case 1 :
Total manufacturing cost =direct material +direct labor +manufactuirng overhead
= 7590+5130+8120
= 20840
Ending WIP = Total manufacturing cost +BEginning WIP - Cost of goods manufactured
= 20840 + 1900 - 16650
= 6090
Beginning Finished goods inventory = cost of goods available for sale -Cost of goods manufactured
= 18060-16650
= 1410
COGS = Cost of goods available for sale - Ending finished goods
= 18060-3210 = 14850
.Gross profit =NET sales -COGS
= (24370-2160)-14850
= 22210 -14850
= 7360
Net income = 7360 - 2600 = 4760
case 2 :
Direct material used = Total manufacturing cost -DL -MOH
= 17940-7850-3520
= 6570
Beginning WIP = Cost of goods manufactured +ending WIP -Total manufacturing cost
= 22100+2950-17940
= 7110
Goods avaialble for sale = Cost of goods manufactured +beginning finished goods
= 22100 +3950
= 26050
cost of goods sold =goods available for sale - Ending finished goods
= 26050 - 2040
= 24010
Sales revenue = Gross profit + COGS +Sales discount
= 6980 + 24010 + 1560
= 32550
Both operating expense and net income is missing for case 2 ..So it is not possible to find net income unless operating expense are given .
As net income = Gross profit - Operatig expense
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