Financial Statements of a Manufacturing Firm

The following events took place for Rockhaven Biking Inc. during February, the first month of operations as a producer of road bikes:

Purchased $430,000 of materials. Used $389,200 of direct materials in production. Incurred $112,000 of direct labor wages. Applied factory overhead at a rate of 48% of direct labor cost. Transferred $526,300 of work in process to finished goods. Sold goods with a cost of $500,800. Revenues earned by selling bikes, $828,600. Incurred $168,500 of selling expenses. Incurred $81,900 of administrative expenses.

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

Open spreadsheet

a. Prepare the income statement for Rockhaven Biking Inc. for the month ending February 28.

Line Item DescriptionAmountAmountFactory OverheadFinished GoodsGross ProfitOperating IncomeRevenuesRevenues $fill in the blank 3Cost of Goods SoldFactory OverheadOperating IncomeSelling ExpensesRevenuesCost of Goods Sold fill in the blank 5Administrative ExpensesFactory OverheadGross ProfitOperating IncomeRevenuesGross Profit $fill in the blank 7Selling and Administrative Expenses: Cost of Goods SoldFactory OverheadFinished GoodsRevenuesSelling ExpensesSelling Expenses$fill in the blank 9 Administrative ExpensesDirect LaborMaterialsRevenuesWork in ProcessAdministrative Expensesfill in the blank 11 Total Selling and Administrative Expenses fill in the blank 12Cost of Goods ManufacturedFinished GoodsMaterialsOperating IncomeWork in ProcessOperating Income $fill in the blank 14

b. Determine the inventory balances on February 28, the end of the first month of operations.

Materials inventory, February 28$fill in the blank 15Work in process inventory, February 28$fill in the blank 16Finished goods inventory, February 28$fill in the blank 17