Question

Pure Water, Inc. reported the following information for the month of November:

Sales	$949,250
Selling and administrative expenses	$165,000
Direct materials, November 1	$ 25,300
Work in process, November 1	$ 37,500
Finished goods, November 1	$133,000
Direct labor	$225,400
Direct materials, November 30	$ 19,500
Work in process, November 30	$ 86,000
Finished goods, November 30	$113,700
Direct materials purchases	$195,000
Factory overhead	$203,900

The operating income (loss) for the month of November is:

A. $159,950

B. $183,350

C. $348,350

D. $202,650

E. $189,150

F. $387,250

G. ($59,250)

H. None of the above

Answer 1

The answer is Option B : $ 1,83,350

	Schedule of Cost of Goods Sold
	Particulars	Amount
	Direct Materials
	Opening raw materials	25,300
Add:	Purchase of Direct materials	195,000
Less:	Closing raw materials	-19,500
	Direct materials used in production	200,800
Add:	Direct Labour	225,400
Add:	Factory Overhead	203,900
	Total manufacturing costs	630,100
Add:	Opening Work in Process	37,500
Less:	Closing Work in Process	-86,000
	Cost of goods manufactured	581,600
Add:	Opening Finished Goods inventory	133,000
Less:	Closing Finished Goods Inventory	-113,700
	COST OF GOODS SOLD	600,900

	Operating Income Statement
	Particulars	Amount
	Sales	949,250
Less:	Cost of Goods Sold	-600,900
	(refer above table)
	Gross Margin	348,350
Less:	Operating Expenses:
	Selling and Administrative Expenses	-165,000
	Operating Income	183,350