The following information was extracted from the accounting

The following information was extracted from the accounting records of Pickin\' and Grinnin\', LLC, a manufacturer of guitars: $375,000 $435,000 Beginning Raw Materials Inventory Ending Raw Materials Inventory $185,000 S 35,000 44,000 Selling, General, and Administrative Expenses 125,000 $300,000 Direct Factory Labor Indirect Factory Labor Faciory Utilities

Solution

Beginning Raw Material

$         375,000

Add: Raw Material Purchased

$         448,902

Less: Ending Raw Material

$       (435,000)

Raw Material used

$         388,902

Manufacturing Overhead

Indirect Labor

$ 35,000

Add: Factory Utilities

$ 44,000

Add: Building Depreciation ($ 300,000x0.7)

$ 210,000

Total Manufacturing Overhead

$ 289,000

Raw Material used

$         388,902

Add: Direct labor

$         185,000

Add: Manufacturing Overhead

$         289,000

Total manufacturing cost

$         862,902

Less: Work In Process

$         (46,326)

Cost of Goods Manufactured

$         816,576

Add: Beginning Finished Goods

$         475,000

Less: Ending Finished Goods

$       (450,000)

Cost of Goods Sold

$        841,576

Sales Revenue

$     1,446,352

Less: Cost of Goods Sold

$       (841,576)

Gross Profit

$         604,776

Hence option “E. $ 604,776” is correct answer.

Beginning Raw Material	$         375,000
Add: Raw Material Purchased	$         448,902
Less: Ending Raw Material	$       (435,000)
Raw Material used	$         388,902