The following information is available for Bandera Manufacturing Company for the month ending January 31:

Cost of goods manufactured $4,490,000

Selling expenses 530,000

Administrative expenses 340,000

Sales 6,600,000

Finished goods inventory, January 1 880,000

Finished goods inventory, January 31 775,000

For the month ended January 31, determine Bandera Manufacturing's

(A) cost of goods sold,

(B) gross profit, and

(C) net income.

Instructions are listed below.

Explanation:

Giving the following information:

Cost of goods manufactured $4,490,000

Selling expenses 530,000

Administrative expenses 340,000

Sales 6,600,000

Finished goods inventory, January 1 880,000

Finished goods inventory, January 31 775,000

A) COGS = beginning finished inventory + cost of goods manufactured - ending finished inventory

COGS = 880,000 + 4,490,000 - 775,000 = $4,595,000

B) Gross profit = sales - cogs = 6,600,000 - 4,595,000 = 2,005,000

C) Net operating profit = gross profit - selling expense - administrative expense

NOP = 2,005,000 - 530,000 - 340,000 = $1,135,000