Question

10. Selected financial information for Brookeville Manufacturing for the years of 2014 and 2015 are presented in the following table (000s omitted). Sales revenue 4,000 Purchases of direct materials 400 Direct labor 450 Manufacturing overhead 620 Operating expenses 650 Raw materials inventory, Dec 31, 2014 200 Raw materials inventory, Dec 31, 2015 180 Work in process inventory, Dec 31, 2014 320 Work in process inventory. Dec 31, 2015 410 Finished goods inventory, Dec 31, 2014 250 Finished goods inventory, Dec 31, 2015 200 What was the operating income? A. $1,900 B. $2,530 C. $1,930 D. $3,350

Answer 1

Sales			$   4,000
Less: Cost of goods sold
Raw material inventory, Dec 31, 2014	$   200
Add: Raw material purchases	$   400
Less: Raw material inventory, Dec 31, 2015	$   180
Direct material used		$      420
Add: Direct labor		$      450
Manufacturing overhead		$      620
Total manufacturing cost		$   1,490
Add: Work in process inventory, Dec 31, 2014		$      320
Less: Work in process inventory, Dec 31, 2015		$      410
Cost of goods manufactured		$   1,400
Add: Finished goods inventory, Dec 31, 2014		$      250
Less: Finished goods inventory, Dec 31, 2015		$      200
Cost of goods sold			$   1,450
Gross profit			$   2,550
Less: Operating expenses			$      650
Operating income			$   1,900

Answer is A. $1,900

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