QUESTION 7 UVM, Inc. employs a process costing system and usesnormal costing. Its records showed the following inventory balancesin 2019: Jan 1, 2019 Dec 31,2019 Materials.................................. $31,000 ?? Work in process................................. 71,000 50,000 Finished goods................................... 66,000 81,000 The followingtransactions were recorded for the year: Materials were purchased,$450,000. Materials were used in production, $465,000 ($431,000direct and $34,000 indirect). Employee costs were: direct labor,$296,000; indirect labor, $63,000; and administrative salaries,$157,000. Selling costs, $134,000. Factory utility costs, $14,000.Depreciation related to factory operations was $85,000 and $5,000was related to selling and administrative activities. Manufacturingoverhead was applied. The company uses a predetermined overheadrate of $4 per machine hour. At the beginning of the year, thecompany estimated that it would work 44,000 machine-hours. Theactual level of activity for the year was 48,000 machine-hours.Sales for the year totaled $1,287,000 Required: What was UVM’sending Materials balance? How much overhead was applied to Work inProcess in 2019? What was UVM’s actual overhead? What was UVM’scost of goods manufactured? What was UVM’s cost of goods sold(ignoring over- or under-applied overhead)? What was UVM’s grossprofit margin? (Remember to adjust cost of goods sold asnecessary.) What were UVM’s total selling, general andadministrative expenses? What was UVM’s net income for 2019?
