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 $400,000 of materials.

•

Used $343,750 of direct materials in production.

•

Incurred $295,000 of direct labor wages.

•

Applied factory overhead at a rate of 75% of direct labor cost.

•

Transferred $815,000 of work in process to finished goods.

•

Sold goods with a cost of $789,000.

B

Determine the inventory balances at the end of the first month of operations.

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Explanation

.

Determine the inventory balances at the end of the first month of operations.

Points:

.

•

Purchased $400,000 of materials.

•

Used $343,750 of direct materials in production.

•

Incurred $295,000 of direct labor wages.

•

Applied factory overhead at a rate of 75% of direct labor cost.

•

Transferred $815,000 of work in process to finished goods.

•

Sold goods with a cost of $789,000.

Required: A. Prepare the June income statement for Chi-Lite. Assume that Chi-Lite uses the perpetual inventory method. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries.

B

Determine the inventory balances at the end of the first month of operations.

Materials inventory, June 30 Work in process inventory, June 30 Finished goods inventory, June 30

Points:

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Explanation

.

Determine the inventory balances at the end of the first month of operations.

Points:

.

Explanation / Answer

Solution:1 For computation of income statement, it is mandatory to have sales value which you have not provided here. Therefore, i am unable to prepare the income statement for the solution. Rest of the part is solved below.

Solution:2

Material inventory, june 30 Purchased material $     4,00,000.00 Material used in production $     3,43,750.00 Material inventory, june 30 $         56,250.00 work in process inventory Material used in production $     3,43,750.00 direct labor $     2,95,000.00 factory overhead $     2,21,250.00 addition to work in process $     8,60,000.00 transferred to finished goods $     8,15,000.00 work in process inventory, june 30 $         45,000.00 finished goods inventory transferred to finished goods $     8,15,000.00 cost of goods sold $     7,89,000.00 finished goods inventory, june 30 $         26,000.00

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