Question

anufacturing costs for Davenport Company during 2018 were as follows:

Beginning Finished Goods, 1/1/18	$	25,100
Beginning Raw Materials, 1/1/18		36,500
Beginning Work in Process, 1/1/18		111,300
Direct Labor for 2018	$	276,300
Ending Finished Goods, 12/31/18		23,400
Ending Raw Materials, 12/31/18		40,750
Ending Work in Process, 12/31/18		121,600
Material Purchases for 2018		305,200
(including $20,000 of indirect material)

Note: The pre-determined overhead rate is 0.85 (85%) of direct labor cost.

Required:

1. Prepare a Cost of Goods Manufactured report.

2. Prepare a Partial Income Statement if sales revenue was $1,350,000 and operating expenses were $260,000 for 2018.

Answer 1

• Requirement #1

Schedule of Cost of Goods Manufactured
Direct materials:
Beginning raw material inventory	$36,500
Add: Purchase of raw material	$305,200
Total raw materials available	$341,700
Less: Ending raw material inventory	$40,750
Raw material used in production	$300,950
Less: Indirect materials	$20,000	$280,950
Direct labor cost		$276,300
Manufacturing Overhead applied		$234,855
Total manufacturing costs		$792,105
Add: Beginning WIP Inventory		$111,300
Total cost of Work in Process		$903,405
Less: Ending WIP Inventory		$121,600
Cost of Goods manufactured		$781,805

• Requirement 2

--Note

Schedule of Cost of Goods Sold
Beginning Finished Goods Inventory	$25,100
Add: Cost of Goods manufactured	$781,805
Cost of Goods available for sale	$806,905
Less: Ending finished goods inventory	$23,400
Cost of Goods Sold	$783,505

--Income Statement

Sales		$1,350,000
Cost of Goods Sold		$783,505
Gross Profits		$566,495
Operating Expenses:
Total Operating Expense		$260,000
Net Income		$306,495