Question

Use the following to answer questions 1-4 . Karmana Corporation for the just completed year. (In thousands)

Sales ................................................................................................ $950 .............

Raw materials inventory, beginning ................................ $10 ............................

Raw materials inventory, ending ................................ $30 .................................

Purchases of raw materials ................................................................ $120 ...........

Direct labor ................................................................ $180 ..................................

Manufacturing overhead ................................................................ $230 .............

. Administrative expenses ................................................................ $100 ..............

Selling expenses ................................................................ $140 ...........................

Work in process inventory, beginning ................................ $70 .........................

Work in process inventory, ending ................................ $40 ..............................

Finished goods inventory, beginning ................................ $100 ...........................

Finished goods inventory, ending ................................ $80

1. The cost of the raw materials used in production during the year (in thousands of dollars) was:

2. The cost of goods manufactured (finished) for the year (in thousands of dollars) was:

3. The cost of goods sold for the year (in thousands of dollars) was:

4. The net operating income for the year (in thousands of dollars) was:

Answer 1

Correct Answer:

Direct Material
Beginning raw material Inventory	$      10,000.00
Add: Raw material Purchases	$ 1,20,000.00
Raw material Available for use	$ 1,30,000.00
Less: Ending Raw material Inventory	$      30,000.00
Material Used in Production		$     1,00,000.00
Direct labor		$      1,80,000.00
Manufacturing Overheads		$      2,30,000.00
Total manufacturing Cost		$      5,10,000.00
Add: Beginning Work in Progress		$          70,000.00
Total Cost of Work in Progress		$      5,80,000.00
Less: Ending Work in progress		$          40,000.00
Cost of Goods Manufactured		$      5,40,000.00

Sales		$    9,50,000.00
Cost Of goods sold
Finished goods Inventory, December 31 2016	$                         1,00,000.00
Cost of Goods manufactured	$                         5,40,000.00
Cost of Goods Available for sale	$                         6,40,000.00
Less: Finished goods Inventory, December 31 2017	$                             40,000.00
Cost of Goods sold		$    6,00,000.00
Gross Profit		$    3,50,000.00
Operating Expenses
Selling Expense	$                         1,40,000.00
Administrative expense	$                         1,00,000.00
Total Operating expense		$    2,40,000.00
Net Operating Income		$    1,10,000.00

End of answer.

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