Management of Parrent Corporation has asked your help as an intern in preparing some key reports for April. The company started the month with raw materials inventories of $32,000. During the month, the company made raw materials purchases amounting to $68,000. At the end of the month, raw materials inventories totaled $35,000. Direct labor cost was $43,000 and manufacturing overhead was $62,000. The beginning balance in the work in process account was $19,000 and the ending balance was $12,000. The beginning balance in the finished goods account was $35,000 and the ending balance was $58,000. Sales totaled $240,000. Selling expense was $18,000 and administrative expense was $42,000.
-The net operating income for April was:
A) $26,000
B) $86,000
C) $75,000
D) $7,000

Question

Quizplus · Accepted Answer

Net operating income = Sales - Cost of goods sold - Selling expense - Administrative expenseCost of goods sold = Beginning work in process inventory + Direct labor cost + Manufacturing overhead + Ending work in process inventory - Beginning raw materials inventory - Ending raw materials inventory + Raw materials purchases= 19,000 + 43,000 + 62,000 + 12,000 - 32,000 - 35,000 + 68,000= 86,000Net operating income = 240,000 - 86,000 - 18,000 - 42,000= 26,000

Management of Parrent Corporation Has Asked Your Help as an Intern