Example:- Income statement information of ABC manufacturing business for the month
December 2013 is given as bellow
– Revenue 2013………………………………………210,000
– Direct material Jan 1, 2013…………………………11,000
– Purchase of material………………………………...73,000
– Direct material Dec 31,2013…………………………8,000
– Direct manufacturing labor…………………………..9,000
– Indirect material cost…….....……………………….15,000
– Indirect labor cost……………………………………5,000
– Factory repairs expense………………………………3,000
– Factory depreciation………………………………….2,000
– Factory electricity, water and utility cost…………….5,000
– Work in process inventory Jan 1,2013……………....6,000
– Work in process inventory Dec 31,2013…………….7,000
– Finished goods inventory Jan 1,2013……………….22,000
– Finished goods inventory Dec 31,2013……………..18,000
– Marketing and promotion cost………………………10,000
– Office machine depreciation…………………………15,000
– Marketing salaries……………………………………20,000
Required:-
1) Prepare the schedule of income statement
2) Calculate prime and conversion cost
2. Eschliman Manufacturing Company had the following account balances
for the quarter ending September 30, unless otherwise noted:
Depreciation of manufacturing equipment
$88,000
Depreciation of office equipment
41,200
Direct manufacturing labor 160,000
Direct materials used 126,000
Finished goods inventory (July 1) 180,000
Finished goods inventory (September 30) 170,000
General office expenses
101,800
Indirect manufacturing labor 62,000
Indirect materials used 28,000
Marketing distribution costs 10,000
Miscellaneous plant overhead
45,000
Plant utilities 30,800
Property taxes on building 9,600
Property taxes on salespersons' company vehicles 4,000
Work-in-process inventory (July 1) 46,800
Work-in-process inventory (September 30)
57,000
Required:
a. Prepare a cost of goods manufactured schedule for the quarter.
b. Prepare a cost of goods sold schedule for the quarter.
1. Presented below is information from the records of Britton Company for
March:
Purchases:
Direct materials $9,000,000
Indirect materials
200,000
Office supplies 420,000
Sales
36,000,000
Salaries and Benefits:
Selling and administrative
4,000,000
Direct manufacturing labor 6,000,000
Rent*
4,000,000
Utilities* 1,200,000
Advertising 700,000
Inventories: March 1
March 31
Direct materials $4,400,000
$1,600,000
Indirect materials 500,000
600,000
Office supplies 150,000 180,000
Finished goods 24,000,000
16,000,000
*Of these costs, 60 percent are assigned to manufacturing and 40 percent to
selling and administration.
Required:
a) Prepare a schedule of cost of goods manufactured.
b) Prepare an income statement for the month.
c) Compute the prime costs, conversion costs, and indirect
manufacturing costs.
2. Farley Muffler, Inc. received the following monthly reports from its newly
hired accountant, who quit after only a week on the job.
Farley Muffler, Inc.
Cost of Goods Sold Schedule
Finished Goods Inventory (beginning) $15,000
Work-in -process Inventory (beginning)
3,000
Total $18,000
Current Manufacturing Costs:
Salaries and wages:
Direct manufacturing labor $5,000
Indirect manufacturing labor 2,000
Sales salaries 4,000
Administrative 3,000 $14,000
Other:
Manufacturing supplies $1,500
Manufacturing depreciation 3,500
Insurance on showroom 1,000
Miscellaneous factory overhead 6,500 12,500
26,500
Total Work-in -process
$44,500
Ending Work -in-process and Finished Goods inventory
0
Cost of Goods Sold
$44,500
Farley Muffler, Inc.
Income Statement
Sales $100,000
Less direct materials 20,000
Gross profit $80,000
Less other expenses:
Cost of goods sold $44,500
Office supplies 250
Manufacturing utilities 1,000
Office utilities 250 46,000
Net Income
$34,000
Required:
a) Prepare a cost of goods manufactured statement in good form.
b) Prepare an income statement in good form.
