Question

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:

a. Purchased $138,600 of materials.

b. Used $93,540 of direct materials in production.

c. Incurred $182,560 of direct labor wages.

d. Incurred $213,040 of factory overhead.

e. Transferred $426,220 of work in process to finished goods.

f. Sold goods for $660,000.

g. Sold goods with a cost of $367,500.

h. Incurred $86,200 of selling expense.

i. Incurred $70,250 of administrative expense.

Required: Using the information given, complete the following: a. Prepare the March income statement for Digital Vibe Manufacturing Company. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. b. Determine the inventory balances at the end of the first month of operations.

Answer 1

a) Income statement

Sales		660000
Cost of goods sold		-367500
Gross profit		292500
Operating expense
Selling expense	86200
Administrative expense	70250
Total operating expense		-156450
Operating income		136050

b) Inventory balance

Raw material inventory (138600-93540)	45060
Work in process inventory (93540+182560+213040-426220)	62920
Finished goods (426220-367500)	58720