Question

1. Cost classifications (8pts): Below is the information for the month ended September 30, 2020 for Midnight, Inc., a clock manufacturer. Assume the Raw Materials inventory account balance includes both direct and indirect raw materials. Assume there are no taxes.

Advertising Expense	$                   9,410
Depreciation Expense - Factory equipment	$                   5,430
Depreciation Expense - Main Office equipment	$                   3,220
Direct labor used	$                 34,810
Factory insurance costs	$                      950
Factory maintenance costs	$                   2,400
Factory rent	$                 14,970
Factory supervisor's salary	$                   9,920
Factory utilities	$                   3,045
Indirect labor used	$                   4,185
Indirect materials used	$                      530
Main Office administrative salaries	$                 41,090
Main Office rent	$                   3,670
Salesperson salaries	$                 34,240
Sales	$               441,725
Raw materials purchased (direct and indirect)	$                 89,140
Raw materials inventory (direct and indirect), beginning balance	$                 20,570
Raw materials inventory (direct and indirect), ending balance	$                 18,920
Work in process (WIP) inventory, beginning balance	$                 15,210
Work in process (WIP) inventory, ending balance	$                 13,990
Finished goods inventory, beginning balance	$               114,650
Finished goods inventory, ending balance	$               129,830

Calculate the following for Midnight, Inc. for the month ended September 30, 2020. You must show all of your work/calculations in order to receive full credit (1pt each):

1. Direct materials used
2. Total factory overhead costs
3. Total manufacturing costs
4. Total non-manufacturing costs
5. Cost of goods manufactured
6. Cost of goods sold
7. Gross profit
8. Net income (assume no taxes)

Answer 1

Raw material inventory, beginning	$20,570
Add: Raw material purchased	89,140
Raw material available for use	109,710
Less: Raw material inventory, ending	18,920
Less: Indirect material	530
Direct materials used	$90,260
Factory overhead:
Depreciation expense-Factory equipment	5,430
Factory insurance	950
Factory maintenance	2,400
Factory rent	14,970
Factory supervisor's salary	9,920
Factory utilities	3,045
Indirect labor	4,185
Indirect materials	530
Total factory overhead	$41,430
Direct materials uesd	90,260
Direct labor used	34,810
Factory overhead	41,430
Total manufacturing costs	$166,500
Advertising expense	9,410
Depreciation expense-Main office equipment	3,220
Main office administrative salaries	41,090
Main office rent	3,670
Salesperson salaries	34,240
Total non-manufacturing costs	$91,630

Work in process inventory-Beginning	$15,210
Add: Total manufacturing costs	166,500
Less: Work in process inventory-Ending	13,990
Cost of goods manufactured	$167,720
Finished goods inventory-Beginning	114,650
Add: Cost of goods manufactured	167,720
Cost of goods available	282,370
Less: Finished goods inventory-Ending	129,830
Cost of goods sold	$152,540
Sales	441,725
Less: Cost of goods sold	152,540
Gross profit	$289,185
Gross profit	289,185
Less: Total non manufacturing costs	91,630
Net income	$197,555