Figure 2-15 Information from the records of Chrome Ponies Enterprises for June 2

Question

Figure 2-15

Information from the records of Chrome Ponies Enterprises for June 2014 is as follows:

Sales $41,000

Direct labor 10,000

Selling and administrative expenses 7,000

Direct materials purchases 5,000

Factory overhead 11,500

Inventories

June 1, 2014    June 30, 2014

Direct materials                      $1,200           $1,400

Work in process                      2,500               2,800

Finished goods                        2,300               1,900

7. Refer to Figure 2-15. What is the gross margin (profit)?

a.

$11,500

b.

$11,600

c.

$ 14,500

d.

$ 14,600

Explanation / Answer

Calculate cost of goods sold :

Gross profit = Sales-Cost of goods sold

= 41000-26400

Gross profit = 14600

So answer is d) $14600

Beginning direct material 1200 Direct material purchase 5000 Less: Ending direct material -1400 Direct material used 4800 Direct labour 10000 Factory overhead 11500 Total manufacturing cost 26300 Beginning work in process 2500 Less; Ending work in process -2800 Cost of goods manufactured 26000 Beginning finished goods 2300 Less: Ending finished goods -1900 Cost of goods sold 26400

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