Question

The following information is available for Bandera Manufacturing Company for the month ending January 31:
Cost of goods manufactured $4,490,000
Selling expenses 530,000
Administrative expenses 340,000
Sales 6,600,000
Finished goods inventory, January 1 880,000
Finished goods inventory, January 31 775,000
For the month ended January 31, determine Bandera Manufacturing’s
(A) cost of goods sold,
(B) gross profit, and
(C) net income.

Answer 1

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Cost of goods manufactured $4,490,000

Selling expenses 530,000

Administrative expenses 340,000

Sales 6,600,000

Finished goods inventory, January 1 880,000

Finished goods inventory, January 31 775,000

A) COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory

COGS= 880,000 + 4,490,000 - 775,000= $4,595,000

B) Gross profit= sales - cogs= 6,600,000 - 4,595,000= 2,005,000

C) Net operating profit= gross profit - selling expense - administrative expense

NOP= 2,005,000 - 530,000 - 340,000= $1,135,000