Question

The Ryde and Rowe Inc. had the following account balances as of January 1 Inventory Inventory Inventory Overhead Direct Materials Work in Process Finished Goods Manufacturing $ 8,700 76,500 53,000 0 During the month of January, all of the following occurred 1. Direct labor costs were $48,000 for 1,800 hours worked 2 Direct materials costing $29,000 and indirect materials costing $5,100 were purchased 3. Sales commissions of $17,000 were earned by the sales force 4. $22,000 worth of direct materials were used in production. 5. Advertising costs of $6,300 were incurred 6. Factory supervisors earned salaries of $11,935 7. Indirect labor costs for the month were $3,000 8. Monthly depreciation on factory equipment was $4,500 9. Utilities expense of $6,899 was incurred in the factory 10. Equipment with manufacturing costs of $69,000 were transferred to finished goods 11. Monthly insurance costs for the factory were $4,200 12. $5,000 in property taxes on the factory were incurred and paid 13. Equipment with manufacturing costs of $94,331 were sold for $171,511

Answer 1

a) Ending balance of Direct material inventory = 8700+29000-22000 = 15700

Ending balance of work in process = 76500+22000+48000+34400-69000 = $111900

Ending balance of finished goods = 53000+69000-94331 = $27669

b) Balance in manufacturing overhead :

Actual manufacturing overhead = 11935+3000+4500+6899+4200+5000 = 35534

Assign manufacturing overhead = 34400

Ending balance of manufacturing overhead = 35534-34400 = 1134 Debit balance

c) Operating income = 171511-94331-17000-6300 = 53880