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 $41,000 for 1,800 hours worked.

2. Direct materials costing $29,000 and indirect materials costing $3,700 were purchased.

3. Sales commissions of $16,000 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 $11,719

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

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

9.Utilities expense of $5,324 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 $90,84 were sold for $165,169.

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?

A. Direct materials inventory:

Work in process inventory:

Finished goods inventory:

B. Manufacturing overheard:

C. Operating income:

Answer 1

Answer a and b
Calculation of balances at the end of January
Direct Material
To balance b/d	$8,700.00	By Work in process	$22,000.00
To Accounts Payable	$29,000.00
		By balance c/f	$15,700.00
	$37,700.00		$37,700.00
Work in process
To balance b/d	$76,500.00	By Finished Goods Inventory	$69,000.00
To Wages Payable	$41,000.00
To Direct Material	$22,000.00
		By balance c/f	$70,500.00
	$139,500.00		$139,500.00
Finished Goods Inventory
To balance b/d	$53,000.00	By Cost of goods sold	$9,084.00
To Work in process	$69,000.00
		By balance c/f	$112,916.00
	$122,000.00		$122,000.00
Manufacturing Overhead
To balance b/d	$0.00	By Work in process	$34,400.00
To Salaries Payable	$11,719.00	(overhead applied)
To Accounts Payable	$3,700.00
To Wages Payable	$3,000.00
To Accumulated Depreciation	$4,500.00
To Utility Expense	$5,324.00
To Insurance Exp.	$4,200.00
To Property Tax	$5,000.00	By balance c/f	$3,043.00
	$37,443.00		$37,443.00
	Jan end balances
Direct materials inventory:	$15,700.00
Work in process inventory:	$70,500.00
Finished goods inventory:	$112,916.00
Manufacturing overheard:	$3,043.00
Answer c
Calculation of Operating Income
Sales	$165,169.00
Less : Cost of goods sold	$9,084.00
Gross Margin	$156,085.00
Less : Selling and administrative exp.
Sales Commission	$16,000.00
Advertising Expense	$6,300.00
Operating Income	$133,785.00