Question

StorSmart Company makes plastic organizing bins. The company has the following inventory balances at the beginning and end of March:

StorSmart Company makes plastic organizing bins. The company has the following inventory balances at the beginning and end of March: Ending Inventory Raw materials Work in process Finished goods Beginning Inventory $28,500 22,400 79, 100 $26,800 46,000 69,700 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 $ 40,000 1,200 62,500 36,200 23,900 236,600 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

Cost of goods manufactured report is prepared as follows:

STORSMART COMPANY
Cost of goods manufactured Report
For the month of March
Beginning raw material inventory	28500
Add: Purchases	40000
Less: Indirect materials	-1200
Less: Ending raw materials inventory	-26800
Direct materials used in production	40500
Add: Direct labor	62500
Add: Manufacturing overhead	36200
Total current manufacturing costs	139200
Add: Beginning work in process inventory	22400
Less: Ending work in process inventory	-46000
Cost of goods manufactured	115600

2.

Income statement for the month of March is computed as follows:

STORSMART COMPANY
Income statement
For the month of March
Sales revenue		236600
Less: Cost of goods sold
Cost of goods manufactured	115600
Add: Beginning finished goods inventory	79100
Less: Ending finished goods inventory	-69700
Cost of goods sold		-125000
Gross profit		111600
Less: selling and admn expenses		-23900
Net operating income		87700