Question

the rate determined in part (a)? $_ c. During Januarv. the operating room was used 186 hours. The actual overhead costs incurred for January were $36.400. Deter overapplied operating overhead or underapplied operating overhead for the period. Enter your answer as a positive number over or underapplied? 3. The following events took place for Chi-Lite Inc. during June 2016, the first month of operations as a producer of road bikes: • Purchased $399,560 of materials. • Used $342,540 of direct materials in production. • Incurred $290, 100 of direct labor wages. • Applied factory overhead at a rate of 73% of direct labor cost. • Transferred $818,820 of work in process to finished goods. • Sold goods with a cost of $796,000. • Sold goods for $1,400,110. • Incurred $313,290 of selling expenses. • Incurred $125,090 of administrative expenses. Prepare the June income statement for Chi-Lite. Determine the inventory balances at the end of the first month of operations,

Answer 1

A.

CHI-LITE Income Statement For The Month Ended June
Sales		$1,400,110
Cost of goods sold		(796,000)
Gross profit		604,110
Selling and administrative expenses:
Selling expenses	$313,290
Administrative expenses	125,090	(438,380)
Net income		$165,730

B.

Material inventory at the end = Material purchased - Material used in production

Material inventory at the end = $399,560 - 342,540 = $57,020

Work in process inventory at the end = Total manufacturing cost - Transferred to finished goods

Work in process inventory at the end = $342,540+290,100+211,773 (290,100*73%) - $818,820 = $25,593

Finished goods inventory at the end = Tranaferred from work in process - Cost of goods sold

Finished goods inventory at the end = $818,820 - 796,000 = $22,820