The Precision Widget Company had the following balances in their accounts at the end of the...
- The Precision Widget Company had the following balances in their accounts at the end of the accounting period:
|
Work in Process Inventory |
$45,000 |
|
Finished Goods Inventory |
$67,500 |
|
Cost of Goods Sold |
$112,500 |
Given the company’s manufacturing overhead was overallocated by $8,000 and Precision Widget adjusts for this overallocation in their accounts using a proration based on total ending balances in Work in Process, Finished Goods, and Cost of Goods Sold,
- Calculate the following adjusted balances:
|
Account |
Adjusted Balance |
|
Work in Process Inventory |
|
|
Finished Goods Inventory |
- Given sales revenue of $300,000, what is the company’s gross profit reported on the Income Statement?
Homework Answers
a. Calculate the adjusted balances as follows:
Above figures have been calculated in the following manner:
b. Calculate the company's gross profit as follows:
| Sales revenue | $300,000 |
| Less: Adjusted cost of goods sold | $108,500 |
| Gross profit | $191,500 |
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