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Accounting help please!!?

The following events took place for Fed Inc. during October 2012, the first month of operations as a producer of road bikes:

•Purchased $427,000 of materials.

•Used $367,500 of direct materials in production.

•Incurred $315,000 of direct labor wages.

•Applied factory overhead at a rate of 80% of direct labor cost.

•Transferred $892,500 of work in process to finished goods.

•Sold goods with a cost of $848,750.

•Sold goods for $1,500,000.

•Incurred $367,500 of selling expenses.

•Incurred $131,950 of administrative expenses.

b. Determine the inventory balances at the end of the first month of operations.

Work in process inventory, October 31:

1 Answer

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  • Sandy
    Lv 7
    6 years ago
    Favorite Answer

    Cost of goods manufactured:

    Direct materials $367,500

    Direct labor $315,000

    Factory overhead $252,000

    Total manufacturing costs $934,500

    Add Work in process inventory, October 1: $0

    Less Work in process inventory, October 31: $42,000

    Cost of goods manufactured $892,500

    Income statement

    Sales $1,500,000

    less

    Cost of goods sold

    ..Beg. finished goods $0

    ..Cost of goods manufactured $892,500

    ..less Ending finished goods $43,750

    ..Cost of goods sold $848,750

    Gross profit $621,250

    less

    Operating expenses

    ..selling expenses $367,500

    ..administrative expenses $131,950

    Earnings before taxes $151,800

    b. Determine the inventory balances at the end of the first month of operations.

    Direct materials inventory $59,500

    Work in process inventory $42,000

    Finished goods inventory $43,750

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