At 1 January 2013, Feldstein Manufacturing Company had a beginning balance in Work in process of $80 000 and a beginning balance in Finished goods of $20 000. During the year, Feldstein incurred manufacturing costs of $350 000.
During the year, the following transactions occurred:
Job A- 12, was completed for a total cost of $120 000, and was sold for $125 000. Job A- 13, was completed for a total cost of $200 000, and was sold for $210 000. Job A- 15, was completed for a total cost $60 000, but was not sold as of year- end.
The Manufacturing overhead account had a preliminary credit balance of $12 000, and was cleared to zero at year- end.
What was the amount of gross profit reported by Feldstein at the end of the year?

Question

Quizplus · Accepted Answer

Gross profit is the difference between sales revenue and the cost of goods sold. The cost of goods sold is the sum of the beginning work in process inventory, the manufacturing costs incurred during the year, and the ending work in process inventory. The ending work in process inventory is $60,000. Therefore, the cost of goods sold is $80,000 + $350,000 + $60,000 = $490,000. The sales revenue is $125,000 + $210,000 = $335,000. Therefore, the gross profit is $335,000 - $490,000 = $27,000.

At 1 January 2013, Feldstein Manufacturing Company Had a Beginning