Question

Having difficulty in following all of this, managerial accounting is a new subject to me so hopefully this make sense so I can better understand it, thank you for the help.

The following events took place for Digital Vibe Manufacturing Company during March, the first month of its operations as a producer of digital video monitors:

	a. Purchased $136,600 of materials.
	b. Used $94,840 of direct materials in production.
	c. Incurred $183,840 of direct labor wages.
	d. Incurred $211,760 of factory overhead.
	e. Transferred $427,460 of work in process to finished goods.
	f. Sold goods for $666,000.
	g. Sold goods with a cost of $367,750.
	h. Incurred $84,980 of selling expense.
	i. Incurred $70,500 of administrative expense.

	Required:
	Using the information given, complete the following: a. Prepare the March income statement for Digital Vibe Manufacturing Company. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. b. Determine the inventory balances at the end of the first month of operations.

Answer 1

1) Income statement

Revenues       66,000     
Cost of goods sold       367,750     
Gross profit       298,250     
Operating expenses:             
Selling expenses   84,980         
Administrative exp   70,500         
Total operating expenses       155,480     
Net income       142,770     

2) W.I.P = Beginning inventory balance + total manufacturing costs
$427,460 = Beginning inventory balance + (94,840+183,840+211,760)
Beginning inventory balance = 62,980
Ending finished goods inventory = WIP - COGS = 427,460 - 367,750 = 59,710