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BUS-2003 Study Guide - Midterm Guide: Gross Margin, Finished Good, Net Income


Department
BUSINESS AND ADMINISTRATION
Course Code
BUS-2003
Professor
Debbie Mortimer
Study Guide
Midterm

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DEPARTMENT OF BUSINESS AND ADMINISTRATION
BUS2003
Test 1
September 29, 2010
Name:____________________________________________________
Student Number: __________________________________________
Instructions: Please answer the following questions on the examination test sheets. If you
need more room, please use the back of the pages. Show your calculations in detail.
Grading:
Q1
/13
Q2
/15
Q3
/5
Total
/33
BUS2003 Test 1 page 1 of 5
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Question 1: (13 marks)
The following information is from Marchant Manufacturing Co. for September:
Direct materials used in production $ 95,000
Direct labour $ 67,000
Total manufacturing cost $234,000
Direct materials inventory, Sept. 1 $ 24,000
Work-in-process inventory, Sept. 1 $ 6,000
Finished goods inventory, Sept. 1 $101,000
Purchases of direct materials $102,000
Cost of goods manufactured $233,000
Administrative expense $ 41,000
Selling expense $ 56,000
Sales $344,000
Gross margin $127,000
Net income $ 30,000
Required:
a) Compute the cost of goods sold. (2 marks)
b) Compute the balance in finished goods inventory at September 30. (3 marks)
c) Compute the balance in work-in-process inventory at September 30. (3 marks)
d) Compute the balance in raw materials inventory at September 30. (3 marks)
e) Compute the total manufacturing overhead. (2 marks)
(Hint: The easiest method of solving this problem is to sketch out the income statement
and the schedule of cost of goods manufactured, enter the given amounts, and then enter
the unknowns as plug figures.)
Question 1 Solution
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