Question
Dot Corporation, a manufacturer, purchases 100% of its Raw Materials on account from vendor, Smash Company and applies overhead to production jobs using a pre-determined
Dot Corporation, a manufacturer, purchases 100% of its Raw Materials on account from vendor, Smash Company and applies overhead to production jobs using a pre-determined overhead rate based on direct labor dollars. At the end of each year, using the method taught in class, Dot records a disposal entry writing off any under-or-over applied MOH. Below, Dot provides the account balances reported on the company's year-end balance sheet as well as the budgeted and actual activity for the twelve months ended 12/31/2019:
Consider the above information and assume Dot reports Sales Revenue of $2,075,000 for the twelve months ended 12/31/2019. Select the answer below that correctly shows the company's 2019 gross profit. The answer is apparently $815,000. Can someone explain why it is $815,000?
Account Balances: Raw Materials Work In Process Finished Goods Accounts Payable- Smash 12/31/2018 $50,000 100,000 70,000 22,000 12/31/2019 ? 225,000 105,000 35,000 Budgeted & Actual 2019 Activity: Purchases of Raw Materials Direct Materials (Requisitioned) Indirect Materials (Requisitioned) Direct Labor (incurred) Indirect Labor (incurred) Factory Depreciation Non-Factory Depreciation Factory Supervisor(s) Salaries Non Factory Supervisor(s) Salaries Factory Insurance, Utilities & Rent Non Factory Insurance, Utilities & Rent Budgeted $350,000 325,000 40,000 400,000 45,000 155,000 80,000 215,000 300,000 225,000 180,000 Actual $380,000 338,000 35,000 415,000 52,000 125,000 82,000 225,000 308,000 230,000 188,000Step by Step Solution
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