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Folk Exam Questions - Chapter 1

1. The following data (in thousands of dollars) have been taken from the accounting
records of Davis Corporation for the just completed year:

Administrative expenses $ 600


Direct labor 800
Finished goods inventory, beginning 480
Finished goods inventory, ending 640
Manufacturing overhead 920
Purchases of raw materials 480
Raw materials inventory, beginning 160
Raw materials inventory, ending 280
Sales 3,960
Selling expenses 560
Work in process inventory, beginning 280
Work in process inventory, ending 200

What was the cost of the raw materials used in production during the year (in
thousands of dollars)?

Solution:

Raw materials inventory, beginning $160


Purchases of raw materials 480
Less raw materials inventory, ending (280)
Raw materials used in production $360

2. The following data (in thousands of dollars) have been taken from the accounting
records of Davis Corporation for the just completed year:

Administrative expenses $ 600


Direct labor 800
Finished goods inventory, beginning 480
Finished goods inventory, ending 640
Manufacturing overhead 920
Purchases of raw materials 480
Raw materials inventory, beginning 160
Raw materials inventory, ending 280
Sales 3,960
Selling expenses 560
Work in process inventory, beginning 280
Work in process inventory, ending 200
What was the cost of goods manufactured (finished) for the year (in thousands of
dollars)?

Solution:

Work in process inventory, beginning $ 280


Raw materials used in production (calculated above) 360
Direct labor 800
Manufacturing overhead 920
Total manufacturing costs 2,360
Less: work in process inventory, ending (200)
Cost of goods manufactured $2,160

3. The following data (in thousands of dollars) have been taken from the accounting
records of Davis Corporation for the just completed year:

Administrative expenses $ 600


Direct labor 800
Finished goods inventory, beginning 480
Finished goods inventory, ending 640
Manufacturing overhead 920
Purchases of raw materials 480
Raw materials inventory, beginning 160
Raw materials inventory, ending 280
Sales 3,960
Selling expenses 560
Work in process inventory, beginning 280
Work in process inventory, ending 200

What was the cost of goods sold for the year (in thousands of dollars)?

Solution:

Finished goods inventory, beginning $ 480


Cost of goods manufactured (calculated above) 2,160
Less finished goods inventory, ending (640)
Cost of goods sold $2,000

4. The following data (in thousands of dollars) have been taken from the accounting
records of Davis Corporation for the just completed year. (Note that this is the same
data as that provided for the question above.)

Administrative expenses $ 600


Direct labor 800
Finished goods inventory, beginning 280
Finished goods inventory, ending 640
Manufacturing overhead 920
Purchases of raw materials 480
Raw materials inventory, beginning 160
Raw materials inventory, ending 280
Sales 3,960
Selling expenses 560
Work in process inventory, beginning 280
Work in process inventory, ending 200

What was the net income for the year (in thousands of dollars)?

Solution:

Sales $3,960
Cost of goods sold (calculated above) 2,000
Gross profit 1,960
Operating expenses:
Administrative expenses $600
Admin
istrativ
e
expens
es
Selling expenses 560 (1,160)
Net income $ 800

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