StorSmart Company makes plastic organizing bins The company

StorSmart Company makes plastic organizing bins. The company has the following inventory balances at the beginning and end of March Beginning Inventory Ending Inventory Raw materials Work in process Finished goods $33,000 25,000 60,000 $22,000 44,000 58,000 Additional information for the month of March follows Raw materials purchases Indirect materials used Direct labor Manufacturing overhead applied Actual manufacturing overhead costs Seliling, general, and administrative expenses Sales revenue $84,000 10,000 55,000 85,000 86,000 58,000 450,000 1. Calculate the DM used during March. 2. Calculate the COGM for March. 3. Calculate the unadjusted COGS for March. 4. What was the NOI for March? Do NOT close the OH account. This is not the end of the year. RM WIP Used Complete Beg DM DL App MOH End Beg End FG COGs Beg COGM End Sell Unadj MOH Actual Applied

Solution

Answer: Requirement 1 Raw Material Beg $                                                                  33,000.00 $                       10,000.00 Indirect material used Purchased $                                                                  84,000.00 $                       85,000.00 DM Used End $                       22,000.00 DM used is as follows Beg bal $                       33,000.00 Add: Purchases $                       84,000.00 Less: Indirect material used $                       10,000.00 Less: End bal $                       22,000.00 DM used $                       85,000.00 Requirement 2 WIP Beg $                                                                  25,000.00 $                     206,000.00 Complete DM $                                                                  85,000.00 DL $                                                                  55,000.00 App MOH $                                                                  85,000.00 End $                       44,000.00 CoGM for March is as follows: Beg bal $                       25,000.00 Add: DM used $                       85,000.00 Add: DL $                       55,000.00 Add: Applied MOH $                       85,000.00 Less: End bal $                       44,000.00 COGM for March $                     206,000.00 Requirement 3 FG Beg $                                                                  60,000.00 $                     208,000.00 Sell COGM $                                                               206,000.00 End $                       58,000.00 Unadj COGS is as follows: Beg bal $                       60,000.00 Add: COGM $                     206,000.00 Less: End bal $                       58,000.00 Unadj COGS for March $                     208,000.00 COGS Unadj $                     208,000.00 Add: Under applied overhead $                          1,000.00 Adj $                     209,000.00 MOH Actual $                       86,000.00 Applied $                        85,000.00 Underapplied OH $                          1,000.00 (86,000-85,000) $                       86,000.00 $                        86,000.00 Requirement 4 NOI for March is as follows: Sales Revenue $                     450,000.00 Less: COGS $                     209,000.00 Gross Profit $                     241,000.00 Less: Selling, general and administrative expenses $                       58,000.00 Net operating income (NOI) $                     183,000.00