The following events took place for Chi-Lite Inc. during June 2016, the first mo

Question

The following events took place for Chi-Lite Inc. during June 2016, the first month of operations as a producer of road bikes:

• Purchased $396,730 of materials. • Used $343,310 of direct materials in production. • Incurred $294,600 of direct labor wages. • Applied factory overhead at a rate of 74% of direct labor cost. • Transferred $816,250 of work in process to finished goods. • Sold goods with a cost of $797,470. • Sold goods for $1,409,300. • Incurred $318,060 of selling expenses. • Incurred $120,840 of administrative expenses.

Explanation / Answer

Particulars Amount Direct material 343310 Direct labor 294600 Prime cost 637910 Factory overhead 74% of labor cost 218004 Selling cost 318070 Administrative cost 120840 Cost of goods sold given in question 797470 Sales 1409300 June income statement Particulars Amount Sales/Revenue 1409300 Cost of goods(direct cost + direct labor)+overhead 855914 Gross profit 553386 Indirect expense : Administrative expense 120840 Selling expense 318070 Net income 114476

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