Lockhart Enterprises recently completed its first fiscal year and developed the following income statement. M. J., the manager, cannot understand why it is showing a net loss when the number of units sold exceeded expectations. Analyze the following income statement and other information given and write a memo to M. J. explaining your findings.
Additional information:
1. The ending balances of Direct Materials Inventory, Work- in- Process Inventory, and Finished Goods Inventory were $ 200,000, $ 381,750, and $ 76,350, respectively.
2. There were no indirect materials used in production.
3. Facility- sustaining overhead consists of depreciation on factory; heat, light, and power for factory; and insurance for factory.
4. There was no over or under applied overhead at any level.

  • CreatedMarch 25, 2015
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