Problem:
Hampton Company had the following inventory balances at the beginning and end of the year:
- January 1st - Decemeber 31
- Raw Material $50,000 - $35,000
- Work in process 130,000 - 255,000
During the year, the company purchased $100,000 of raw material and spent $340,000 on direct labor. Other data: manufacturing overhead incurred, $450,000; sales, $1,560,000; selling and administrative expenses, $90,000; income tax rate, 30%.
Required:
Question 1: Calculate cost of goods manufactured.
Question 2: Calculate cost of goods sold.
Question 3: Determine Hampton's net income.
Note: Provide support for your rationale.