Question

StorSmart Company makes plastic organizing bins. The company has the following inventory balances at the beginning and end of March: Raw materials Work in process Finished goods Beginning Inventory $29,700 22,900 78,200 Ending Inventory $26,200 46,200 68,800 Additional information for the month of March follows: Raw materials purchases Indirect materials used Direct labor Manufacturing overhead applied Selling, general, and administrative expenses Sales revenue $ 41,700 1,800 64,000 36,400 24,800 236,700 Required: 1. Based on the above information, prepare a cost of goods manufactured report. 2. Based on the above information, prepare an income statement for the month of March.

Answer 1

1.

STORSMART COMPANY
SCHEDULE OF COST OF GOODS MANUFACTURED
	$	$
Direct materials:
Beginning Raw materials inventory	29,700.00
Add: Raw materials purchases	41,700.00
Raw materials available for use	71,400.00
Less: Ending Raw materials inventory	(26,200.00)
Raw materials used in production	45,200.00
Less: Indirect Materials used	(1,800.00)	43,400.00
Direct labor		64,000.00
Manufacturing Overhead applied		36,400.00
Total manufacturing costs		143,800.00
Add: Beginning Work in process inventory		22,900.00
Total cost of work in process		166,700.00
Less: Ending Work in process inventory		(46,200.00)
Cost of goods manufactured		120,500.00

2.

STORSMART COMPANY
Income Statement
For the Month of March
	$	$
Sale Revenue		236,700.00
Less: Cost of goods sold :
Beginning Finished Goods Inventory	78,200.00
Cost of Goods Manufactured	120,500.00
Cost of Goods Available for Sale	198,700.00
Ending Finished Goods Inventory	(68,800.00)
Cost of Goods Sold		129,900.00
Gross Profit		106,800.00
Less: Selling, General, and Administrative Expenses		(24,800.00)
Net Income from Operations		82,000.00