Question

The following data (in thousands of dollars) have been taken from the accounting records of Karling...

The following data (in thousands of dollars) have been taken from the accounting records of Karling Corporation for the year just ended.
Sales $990
Direct Materials Used $90
Direct labour $250
Manufacturing overhead $320
Administrative expenses $150
Selling expenses $410
Work-in-process inventory. beginning $70
Work-in-process inventory, ending $50
Finished goods inventory. Beginning $100
Finished goods inventory, ending $160
Required:
a) Compute the Cost of Goods Manufactured
b) Compute Cost of Goods Sold
c) What is the Gross Margin for the Year?
d) Compute Net Operating Income.
Business   Accounting   
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Answer #1

Cost of goods manufactured -

Direct materials - $90

Direct labour - $250

Manufacturing O.H - $320

Administrative overheads - $150

Less- WIP in begining - $70

Add - WIP closing - $50

Less - Finished good begining - $100

Add - Finished goods ending - $160

A.) Cost of goods manufactured - $850

Add - Selling expenses - $410

B.) Cost of goods sold - $1,260

C.) Gross margin - (Sales - COGS) / total sales revenue

= ($990 - $1260) / $990

= Loss - 27.27%

D.) Net Operating Income = total revenue - operating expenses

= $990 - $1,260

= $270 (loss)

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