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 $137,800 of materials.
	b. Used $94,100 of direct materials in production.
	c. Incurred $184,800 of direct labor wages.
	d. Incurred $212,720 of factory overhead.
	e. Transferred $423,160 of work in process to finished goods.
	f. Sold goods for $645,000.
	g. Sold goods with a cost of $365,000.
	h. Incurred $86,260 of selling expense.
	i. Incurred $71,950 of administrative expense.

a. Using the information given, 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.

Digital Vibe Manufacturing Company

Income Statement

For the Month Ended March 31

1
2
3
4	Operating expenses:
5
6
7	Total operating expenses
8

b. Using the information given, determine the inventory balances at the end of the first month of operations.

	Materials
	Work in process
	Finished goods

Answer 1

1) Income statement

Sales		645000
Cost of goods sold		365000
Gross profit		280000
Selling and administrative expense
Selling expense	86260
Administrative expense	71950
Total Selling and administrative expense		158210
Net operating income		121790

Ending inventory balance

Material	137800-94100 = 43700
Work in process	94100+184800+212720-423160 = 68460
Finished goods	423160-365000 = $58160