I. The following information is available for Fun & Games Company for the first
ID: 2902237 • Letter: I
Question
I. The following information is available for Fun & Games Company for the first month of 2014:
Tip: Start with Net Income (11)
Revenues
$30,000
Expenses
16,000
Increase in accounts receivable
1,400
Decrease in inventory
2,000
Decrease in supplies
800
Increase in accounts payable
2,200
Decrease in wages payable
1,000
Depreciation
Revenues
$30,000
Expenses
16,000
Increase in accounts receivable
1,400
Decrease in inventory
2,000
Decrease in supplies
800
Increase in accounts payable
2,200
Decrease in wages payable
1,000
Depreciation
Explanation / Answer
Cost of Goods Sold is Calculated as Sales less Gross Profit.
360,000 - 210,000 = 150,000
Finished Goods Inventory = Cost of Goods Manufactured Less Cost of Goods Sold
180,000 - 150,000 = 30,000
Direct Materials Cost = Direct Materials Purchased Less Materials Inventory
111,000 - 15,000 = 96,000
Work in Process Inventory = Manufacturing Costs less Cost of Goods Manufactured
207,000 - 180,000 = 27,000
Direct Labor = Manufacturing Costs Less Direct Materials Less Overhead.
Overhead in this problem is Indirect Labor Plus Depreciation
207,000 - 96,000 - 78,000 -12,000= 21,000