On January 1, 2015, Frederic Manufacturing Had a Beginning Balance

question 56

Multiple Choice

On January 1, 2015, Frederic Manufacturing had a beginning balance in Work-in-Process Inventory of $160,000 and a beginning balance in Finished Goods Inventory of $20,000. During the year, Frederic incurred manufacturing costs of $200,000. During the year, the following transactions occurred:
Job C-62 was completed for a total cost of $140,000 and was sold for $155,000.
Job C-63 was completed for a total cost of $180,000 and was sold for $210,000.
Job C-64 was completed for a total cost $80,000 but was not sold as of year-end.
The Manufacturing Overhead account had an unadjusted credit balance of $24,000, and was cleared to zero at year-end.
What was the amount of gross profit reported by Frederic at the end of the year?

• A)$21,000
• B)$69,000
• C)$201,000
• D)$161,000

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Definitions:

Capacity

The maximum amount that something can contain or produce.

Variable Costs

Costs that change in proportion to the amount of goods produced or the volume of sales, like labor and materials.

Contribution Margin Ratio

The ratio that represents what percentage of sales contributes to the covering of fixed costs, calculated by subtracting variable costs from sales revenue and dividing the result by sales revenue.

Operating Income

Earnings from a company's core business operations, excluding revenue and expenses from non-operating activities like investments.