# Computing Inventory and Overhead Balances and Operating Income

EXERCISE 16.6
The Ryde and Rowe Inc. had the following account balances as of January 1:
Flow of Costs through
Manufacturing Accounts
Direct Materials Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \$ 89,200
Work in Process Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178,400
Finished Goods Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253,600
Manufacturing Overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -0-
During the month of January, all of the following occurred:
1. Direct labor costs were \$442,000 for 18,000 hours worked.
2. Direct materials costing \$335,750 and indirect materials costing \$13,500 were purchased.
3. Sales commissions of \$216,500 were earned by the sales force.
4. \$326,000 worth of direct materials were used in production.
5. Advertising costs of \$36,300 were incurred.
6. Factory supervisors earned salaries of \$22,000.
7. Indirect labor costs for the month were \$23,000.
8. Monthly depreciation on factory equipment was \$24,500.
Exercises 745
9. Utilities expense of \$17,800 was incurred in the factory.
10. Equipment with manufacturing costs of \$970,100 were transferred to finished goods.
11. Monthly insurance costs for the factory were \$4,200.
12. \$5,000 in property taxes on the factory were incurred and paid.
13. Equipment with manufacturing costs of \$1,089,000 were sold for \$1,550,000.
Instructions
a. If Ryde and Rowe assigns manufacturing overhead of \$84,400, what will be the balances in
the Direct Materials, Work in Process, and Finished Goods Inventory accounts at the end of January?

b. As of January 31, what will be the balance in the Manufacturing Overhead account?

c. What was Ryde and Rowe's operating income for January?