Question

1. What is the ending balance for Raw Materials? __________________________
2. What is the Cost of Goods Manufactured? _______________________________
3. What is the Cost of Goods Sold on the income statement____________________
4. How much overhead was actually incurred this period? __________________________
5. What is the net income for the period? _________________________________

Riverwards Inc. is a small company that manufactures irrigation systems. The line workers earn $32/hour. The company uses job order costing and applies manufacturing overhead on the basis of labor hours. At the beginning of the month, the following estimates were made:

Estimated Manufacturing Overhead Costs -              $261,000

Estimated Direct Labor Hours -                                          900

Beginning balances for inventory accounts were as follows:

            Raw Materials -                                   $30,000

            Work in Process -                                $41,000 Job 1311

            Finished Goods -                                $150,000 Job 1310

The following transactions took place during the month (all purchases and services were acquired on account):

1. $255,000 in raw materials were purchased
2. Direct materials were requisitioned for use in Job 1312, $55,000.
3. Direct materials were requisitioned for use in Job 1313, $80,000.
4. Headquarters incurred $35,000 in utility bills.
5. The factory incurred $15,000 in utility bills.
6. The record for Job 1311 indicated that 280 labor hours were used.
7. The record for Job 1312 indicated that 375 labor hours were used.
8. The record for Job 1313 indicated that 390 labor hours were used.
9. Jobs 1311 and 1312 were completed during the month.
10. Job 1310 and 1312 were sold during the month for $800,000.
11. Headquarters’ janitorial salaries for the month were $5,000.
12. The factory managers’ salaries totaled $160,000.
13. Indirect materials requisitioned totaled $35,000.
14. $100,000 of depreciation on the factory equipment was accrued this month.
15. Advertising costs for the month were $65,000.

Answer 1

Ending balance for raw materials : $ 115,000.

Cost of Goods Manufactured : $ 306,910

Cost of Goods Sold : $ 325,750

Overhead actually incurred : $ 310,000

Net income for the period: $ 362,300

Income Statement For the month ended
Sales		$ 800,000
Less: Adjusted Cost of Goods Sold		332,700
Gross Profit		467,300
Selling and Administrative Expenses
Advertising Expense	65,000
Utilities Expense	35,000
Salaries and Wages Expense	5,000	105,000
Net Income		$ 362,300