Question

Financial Statements of a Manufacturing Firm

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:

1. Purchased $43,200 of materials.
2. Used $33,300 of direct materials in production.
3. Incurred $49,700 of direct labor wages.
4. Incurred $70,000 of factory overhead.
5. Transferred $116,200 of work in process to finished goods.
6. Sold goods for $207,800.
7. Sold goods with a cost of $92,400.
8. Incurred $53,100 of selling expense.
9. Incurred $23,300 of administrative expense.

Using the information given, complete the following:

a. Prepare the March income statement for Digital Vibe Manufacturing Company.

Digital Vibe Manufacturing Company
Income Statement
For the Month Ended March 31
		$
		$
Operating expenses:
	$
Total operating expenses
		$

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

Digital Vibe Manufacturing Company
Inventory Balances
For the Month Ended March 31
Inventory balances on March 31:
Materials	$
Work in process
Finished goods

Answer 1

Digital Vibe Manufacturing Company Income Statement For the Month Ended March 31
Sales		$207,800
Less: Cost of goods sold		($92,400)
Gross profit		$115,400
Operating expense:
Selling expense	$53,100
Administrative expense	$23,300
Total operating expense		($76,400)
Net income		$39,000
Inventory Balances
Material (Purchased (-) Used) ( $43,200 (-) $33,300)	$9,900
Work in process (DM + DL + OH (-) Transferred ($33,300 + $49,700 + $70,000 (-) $116,200)	$36,800
Finished goods (Transferred (-) Cost of Sold sold ) ($116,200 (-) $92,400)	$23,800