Question

Ryde and Rowe Inc. had the following account balances as of January 1.

Direct Materials Inventory		$	8,700
Work in Process Inventory			76,500
Finished Goods Inventory			53,000
Manufacturing Overhead			0

During the month of January, all of the following occurred.

1. Direct labor costs were $49,000 for 1,800 hours worked.

2. Direct materials costing $27,000 and indirect materials costing $4,000 were purchased.

3. Sales commissions of $16,500 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 $12,628.

7. Indirect labor costs for the month were $3,000.

8. Monthly depreciation on factory equipment was $4,500.

9. Utilities expense of $7,673 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 $93,806 were sold for $170,557.

Required:  
a. If Ryde and Rowe assigns manufacturing overhead of $34,400, what will be the balances in the Direct Materials, Work in Process, and Finished Goods Inventory accounts at the end of January?

b. As of January 31, what will be the balance in the Manufacturing Overhead account?​

c. What was Ryde and Rowe’s operating income for January?

	a. Direct materials inventory Work in process inventory Finished goods inventory b. Manufacturing overhead c. Operating income

Answer 1

Answer:

a.)

Direct materials Inventory Jan1	$8,700
Cost of Direct materials	$27,000
Direct material used in Production	($22,000)
Direct Materials Inventory (end of jan )	$13,000

Work-in-progress jan1	$76,500
Direct materials used in production	$22,000
Direct Labor cost	$49,000
Manufacturing Overhead	$34,400
Finished Goods	($69,000)
Work-in-progress Inventory (end of Jan)	$112,900

Finished Goods Inventory Jan1	$53,000
Finished Goods (During January)	$69,000
Cost of goods sold	($93,806)
Finished Goods Inventory, (end of Jan)	$28,194

b.)

Manufacturing Overhead Jan1
Indirect Material Cost	$4,000
Factory Supervisors (salary)	$12,628
Indirect Labor cost	$3,000
Monthly depreciation	$4,500
Utilities Expenses	$7,673
Monthly Insurance (Factory)	$4,200
Property taxes	$5,000
Application of Manufacturing overhead	($34,400)
Manufacturing Overhead (end of Jan)	$6,601

c.)

Sales	$170,557
less:
Manufacturing cost	$93,806
Sales commission	$16,500
Advertisement	$6,300
operating profit	$53,951