Management of Berndt Corporation has asked your help as an intern in preparing some key reports for August. The beginning balance in the raw materials inventory account was $33,000. During the month, the company made raw materials purchases amounting to $62,000. At the end of the month, the balance in the raw materials inventory account was $30,000. Direct labor cost was $46,000 and manufacturing overhead was $74,000. The beginning balance in the work in process account was $13,000 and the ending balance was $19,000. The beginning balance in the finished goods account was $54,000 and the ending balance was $50,000. Sales totaled $270,000. Selling expense was $18,000 and administrative expense was $49,000.
-The net operating income for August was:
A) $20,000
B) $21,000
C) $87,000
D) $83,000

Question

Quizplus · Accepted Answer

The net operating income is calculated as follows:Sales - Cost of Goods Sold - Selling Expense - Administrative Expense = Net Operating IncomeCost of Goods Sold = Beginning Raw Materials Inventory + Raw Materials Purchases - Ending Raw Materials Inventory + Direct Labor Cost + Manufacturing OverheadCost of Goods Sold = $33,000 + $62,000 - $30,000 + $46,000 + $74,000 = $185,000Net Operating Income = $270,000 - $185,000 - $18,000 - $49,000 = $20,000

Management of Berndt Corporation Has Asked Your Help as an Intern