Question

diludlu Financial statements of a manufacturing firm The following events took place for Rushmore Biking Inc. during February, the first month of operations as a producer of road bikes: Purchased $480,000 of materials. Used $434,500 of direct materials in production. Incurred $125,000 of direct labor wages. Applied factory overhead at a rate of 30% of direct labor cost. Transferred $566,100 of work in process to finished goods. Sold goods with a cost of $538,700. Revenues earned by selling bikes, $891,300. Incurred $181,200 of selling expenses. • Incurred $88,100 of administrative expenses.

Answer 1

a)

RUSHMORE BIKING INC INCOME STATEMENT FOR THE MONTH ENDED FEBRUARY 28
Revenue		891300
cost of goods sold		(538700)
Gross profit		352600
selling and administrative expense
selling expense	181200
Administrative expense	88100
Total selling and administrative expense		(269300)
Net income		83300

b)

	Formula	Amount
Material Feb 28	Purchased -Used	480000-434500 =45500
Work in process ,Feb 28	Work in process at beginning +Total manufacturing cost -completed	0+597000-566100 30900
Finished goods Feb 28	Completed -sold	566100-538700 27400

**Total manufacturing cost =Direct material +direct labor +overhead

                     = 434500+125000+ (125000*30%)

                   = 434500 +125000+ 37500

                  = 597000