Question

# Ali Corporation is a manufacturer that uses job-order costing. The company closes out any over-applied or...

Ali Corporation is a manufacturer that uses job-order costing. The company closes out any over-applied or under-applied overhead to Cost of Goods Sold at the end of the year. The company has supplied the following data for the just completed year:

 Beginning inventories: Finished goods \$ 33,000 Estimated total manufacturing overhead at the beginning of the year \$ 635,500 Estimated direct labor-hours at the beginning of the year 41,000 direct labor-hours

Results of operations:

 Actual direct labor-hours 42,000 direct labor-hours Manufacturing overhead: Indirect labor cost \$ 177,000 Other manufacturing overhead costs incurred \$ 444,000 Selling and administrative: Selling and administrative salaries \$ 280,000 Other selling and administrative expenses \$ 310,000 Cost of goods manufactured \$ 1,501,000 Sales revenue \$ 2,704,000 Cost of goods sold (unadjusted) \$ 1,416,000

Question:

Calculate the net operating income. (Round your intermediate calculations to 2 decimal places.).

Overhead rate = \$635500 / 41000 = \$15.50 per unit
Overhead applied = 42000 x 15.50 = \$651000
Actual Overhead = \$177000+444000 = \$621000

 Income Statement Sales Revenue \$   2,704,000 Cost of Goods Sold (Adjusted) \$   1,386,000 Gross Profit \$   1,318,000 Selling and administrative: Selling and administrative salaries \$       280,000 Other selling and administrative expenses \$       310,000 Net Operating Income \$      728,000

*Cost of Goods Sold (Adjusted) = \$1416000 - 30000 = \$1386000

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