Question

Foxwood Company is a metal and woodcutting manufacturer,selling products to the home construction market.Consider the following data for 2018:

Sandpaper $2,000

Materials-handling costs 70,000

Lubricants and coolants 5,000 Miscellaneous indirect manufacturing labour 40,000

Direct manufacturing labour 300,000

Direct materials inventory 1 Jan 2018 40,000

Direct materials inventory 31 Dec 2018 50,000

Work in process inventory 1 Jan 2018 10,000

Work in process inventory 31 Dec 2018 14,000

Plant leasing costs 54,000

Depreciation- Plant equipment 36,000

Insurance on plant equipment 3,000

Direct meterial purchased 460,000

Sales revenues 1,360,000

Marketing promotions 60,000

Marketing salaries 100,000

Distribution costs 70,000

Customer service costs 100,000

Required

1) Prepare a schedule of cost of goods manufactured.

2) Prepare a schedule of costs of goods sold.

3) Prepare an income statement.

Answer 1

1)

Foxwood Company
Schedule of cost of goods manufactured for the year ended 31 December 2018
Direct materials:
Beginning inventory, January1, 2018		$    40,000.00
Purchases of direct materials		$ 460,000.00
Cost of direct materials available for use		$ 500,000.00
Ending inventory, December 31, 2018		$    50,000.00
Direct materials used		$ 450,000.00
Direct manufacturing labour		$ 300,000.00
Indirect manufacturing costs:
Sandpaper	$    2,000.00
Materials-handling costs	$ 70,000.00
Lubricants and coolants	$    5,000.00
Miscellaneous indirect manufacturing labour	$ 40,000.00
Plant-leasing costs	$ 54,000.00
Depreciation – plant equipment	$ 36,000.00
Insurance on plant equipment	$    3,000.00	$ 210,000.00
Manufacturing costs incurred during 2018		$ 960,000.00
Add beginning work in process January 1, 2018		$    10,000.00
Total manufacturing costs to account for		$ 970,000.00
Deduct ending work in process December 31, 2018		$    14,000.00
Cost of goods manufactured		$ 956,000.00

2)

Foxwood Company
Schedule of cost of goods Sold for the year ended 31 December 2018
Beginning finished goods, January 1, 2018		$                   -
Cost of goods manufactured		$ 956,000.00
Ending finished goods, December 31, 2018		$                   -
Cost of goods sold		$ 956,000.00

3)

Income statement for the year ended 31 December 2018
Schedule of cost of goods Sold for the year ended 31 December 2018
Revenues		$ 1,360,000.00
Beginning finished goods, January 1, 2018		$                       -
Cost of goods manufactured	$ 956,000.00
Ending finished goods, December 31, 2018		$                       -
Cost of goods sold		$      956,000.00
Gross Margin		$      404,000.00
Marketing, distribution and customer-service costs
Marketing promotions	$    60,000.00
Marketing salaries	$ 100,000.00
Distribution costs	$    70,000.00
Customer-service costs	$ 100,000.00	$      330,000.00
Operating income		$        74,000.00