Compute Net Income for May Based on the Following Transactions

question 14

Multiple Choice

Compute net income for May based on the following transactions:
May 1 paid $2,200 for May's rent.
May 14 paid $1,200 for two weeks wages.
May 15 performed $5,200 in consulting services on account.
May 17 billed a customer $1,500 for services performed May 16.
May 20 received $5,200 in payment for May 15 transaction.
May 22 performed services and immediately collected $2,000.
May 31 paid $500 for advertising in the local paper to take place in June.

• A) $10,200
• B) $ 5,300
• C) $ 8,700
• D) $13,900
• E) $ 7,000

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Definitions:

Predetermined Overhead Rate

A calculated rate used to allocate manufacturing overhead costs to individual units of production, based on estimated or actual data.

Applied Manufacturing Overhead

The allocation of manufacturing overhead costs to individual units of production based on a formula or rate.

Cost Of Goods Manufactured

The total expense incurred by a company to produce goods in a given period, including materials, labor, and overhead costs.

Direct Materials

Raw materials that can be directly attributed to the production of goods, visually identifiable in the final product.