Question

StorSmart Company makes plastic organizing bins. The company has the following inventory balances at the beginning and end of March Beginning Inventory Ending Inventory Raw materials Work in process Finished goods $33,000 25,000 60,000 $22,000 44,000 58,000 Additional information for the month of March follows Raw materials purchases Indirect materials used Direct labor Manufacturing overhead applied Actual manufacturing overhead costs Seliling, general, and administrative expenses Sales revenue $84,000 10,000 55,000 85,000 86,000 58,000 450,000 1. Calculate the DM used during March. 2. Calculate the COGM for March. 3. Calculate the unadjusted COGS for March. 4. What was the NOI for March? Do NOT close the OH account. This is not the end of the year. RM WIP Used Complete Beg DM DL App MOH End Beg End FG COGs Beg COGM End Sell Unadj MOH Actual Applied

Answer 1

Answer:
Requirement 1	Raw Material
Beg	$                                                                  33,000.00	$                       10,000.00	Indirect material used
Purchased	$                                                                  84,000.00	$                       85,000.00	DM Used
End		$                       22,000.00
	DM used is as follows
	Beg bal	$                       33,000.00
Add:	Purchases	$                       84,000.00
Less:	Indirect material used	$                       10,000.00
Less:	End bal	$                       22,000.00
	DM used	$                       85,000.00
Requirement 2	WIP
Beg	$                                                                  25,000.00	$                     206,000.00	Complete
DM	$                                                                  85,000.00
DL	$                                                                  55,000.00
App MOH	$                                                                  85,000.00
End		$                       44,000.00
	CoGM for March is as follows:
	Beg bal	$                       25,000.00
Add:	DM used	$                       85,000.00
Add:	DL	$                       55,000.00
Add:	Applied MOH	$                       85,000.00
Less:	End bal	$                       44,000.00
	COGM for March	$                     206,000.00
Requirement 3	FG
Beg	$                                                                  60,000.00	$                     208,000.00	Sell
COGM	$                                                               206,000.00
End		$                       58,000.00
	Unadj COGS is as follows:
	Beg bal	$                       60,000.00
Add:	COGM	$                     206,000.00
Less:	End bal	$                       58,000.00
	Unadj COGS for March	$                     208,000.00
	COGS
	Unadj	$                     208,000.00
	Add: Under applied overhead	$                          1,000.00
	Adj	$                     209,000.00
	MOH
	Actual	$                       86,000.00	Applied	$                        85,000.00
			Underapplied OH	$                          1,000.00	(86,000-85,000)
		$                       86,000.00		$                        86,000.00
Requirement 4	NOI for March is as follows:
	Sales Revenue	$                     450,000.00
Less:	COGS	$                     209,000.00
	Gross Profit	$                     241,000.00
Less:	Selling, general and administrative expenses	$                       58,000.00
	Net operating income (NOI)	$                     183,000.00