Financial Statements of a Manufacturing Firm The following events took place for Rushmore Biking Inc. during February, the first month of operations as a producer of road bikes: Purchased $658,400 of materials. Used $566,200 of direct materials in production. Incurred $488,000 of direct labor wages. Applied factory overhead at a rate of 80% of direct labor cost. Transferred $1,386,800 of work in process to finished goods. Sold goods with a cost of $1,316,800. Revenues earned by selling bikes, $2,357,100. Incurred $566,200 of selling expenses. Incurred $210,700 of administrative expenses. a. Prepare the income statement for Rushmore Biking Inc. for the month ending February 28. Assume that Rushmore Biking Inc. uses the perpetual inventory method. Rushmore Biking Inc. Income Statement For the Month Ended February 28 Revenues Cost of goods sold Gross profit $ Selling and administrative expenses: Selling expenses Administrative expenses Total selling and administrative expenses Operating income b. Determine the inventory balances on February 28, the end of the first month of operations. Materials inventory, February 28 Work in process inventory, February 28 Finished goods inventory, February 28 Predetermined factory overhead rate Poehling Medical Center has a single operating room that is used by local physicians to perform surgical procedures. The cost of using the operating room is accumulated by each patient procedure and includes the direct materials costs (drugs and medical devices), physician surgical time, and operating room overhead. On January 1 of the current year, the annual operating room overhead is estimated to be: $258,300 Disposable supplies Depreciation expense Utilities 64,700 27,600 Nurse salaries 240,100 Technician wages 109,300 $700,000 Total operating room overhead The overhead costs will be assigned to procedures, based on the number of surgical room hours. Poehling Medical Center expects to use the operating room an average of eight hours per day, seven days per week. In addition, the operating room will be shut down two weeks per year for general repairs. 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. Determine the predetermined operating room overhead rate for the year. Round your answer to the nearest dollar. per hour b. Bill Harris had a four-hour procedure on January 22. How much operating room overhead would be charged to his procedure, using the rate determined in part (a)? Round your answer to the nearest dollar. c. During January, the operating room was used 260 hours. The actual overhead costs incurred for January were $62,800. Determine the overapplied operating overhead or underapplied operating overhead for the period. Enter your answer as a positive number. Round your answer to the nearest dollar. Cost flow relationships The following information is available for the first year of operations of Creston Inc., a manufacturer of fabricating equipment: Sales $ 12,800,000 Gross profit 5,378,600 424,100 Indirect labor Indirect materials 186,200 837,800 Other factory overhead Materials purchased Total manufacturing costs for the period Materials inventory, end of period 4,266,600 8,150,700 300,000 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. iiiii Open spreadsheet Determine the following amounts. Round your answers to the nearest dollar. a. Cost of goods sold b. Direct materials cost U ORO c. Direct labor cost
