Question

Financial Statements of a Manufacturing Firm

The following events took place for Digital Vibe Manufacturing Company during March, the first month of its operations as a producer of digital video monitors:

1. Purchased $46,400 of materials.
2. Used $35,700 of direct materials in production.
3. Incurred $53,400 of direct labor wages.
4. Incurred $75,200 of factory overhead.
5. Transferred $124,800 of work in process to finished goods.
6. Sold goods for $223,200.
7. Sold goods with a cost of $99,300.
8. Incurred $57,100 of selling expense.
9. Incurred $25,100 of administrative expense.

Using the information given, complete the following:

a. Prepare the March income statement for Digital Vibe Manufacturing Company.

Digital Vibe Manufacturing Company
Income Statement
For the Month Ended March 31
		$
		$
Operating expenses:
	$
Total operating expenses
		$

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

Digital Vibe Manufacturing Company
Inventory Balances
For the Month Ended March 31
Inventory balances on March 31:
Materials	$
Work in process
Finished goods

Answer 1

a. Prepare the March income statement for Digital Vibe Manufacturing Company.

Digital Vibe Manufacturing Company
Income Statement
For the Month Ended March 31
Sales revenue		$223200
Cost of goods sold		99300
Gross profit		$123900
Operating expenses:
Selling expense	$57100
Administrative expense	25100
Total operating expenses		82200
Operating income		$41700

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

Digital Vibe Manufacturing Company
Inventory Balances
For the Month Ended March 31
Inventory balances on March 31:
Materials (46400-35700)	$10700
Work in process (35700+53400+75200-124800)	39500
Finished goods (124800-99300)	25500