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 $43,000 for 1,800 hours worked.

2. Direct materials costing $26,000 and indirect materials costing $4,900 were purchased.

3. Sales commissions of $18,000 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 $10,672.

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

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

9. Utilities expense of $6,359 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 $89,825 were sold for $163,318.

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?

Answer 1

Answer:

a.
		Particulars	Amount
Direct materials inventory, Jan. 1	8,700
Direct materials purchased	26,000
Less: Direct materials used in production	22,000
Direct materials inventory, Jan. 31	12,700
Work in process inventory, Jan. 1	76,500
Direct materials used	22,000
Direct labor used	43,000
Manufacturing overhead assigned	34,400
Less: Finished goods transferred out	-69,000
Work in process inventory, Jan. 31	1,06,900
Finished goods inventory, Jan. 1	53,000
Cost of finished goods transferred in	69,000
Less: Cost of goods sold	89,825
Finished Goods Inventory at the end of January	32,175
b.
		Particulars	Amount
Manufacturing overhead, Jan. 1	-
+ Indirect Materials Purchased	4,900
+ Supervisor Salary	10,672
+ Indirect labor costs	3,000
+ Depreciation	4,500
+ Factory utilities	6,359
+ Factory insurance	4,200
+ Property taxes on factory	5,000
- Manufacturing overhead	-34,400
Manufacturing Overhead at the end of January	4,231
c.
		Particulars	Amount
Revenues	1,63,318
- Cost of Goods Sold	89,825
Gross Profit (A)	73,493
Operating expenses :-
Sales Commissions	18,000
Advertising Expenses	6,300
Total operating expenses (B)	24,300
Operating Income (A-B)	49,193
Answer summary
		Particulars	Amount
a.
Direct materials inventory	12,700
Work in process inventory	1,06,900
Finished goods inventory	32,175
b.
Manufacturing overhead	4,231
c.
Operating income	49,193