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In: Accounting

Preparing a Schedule of Cost of Finished Goods Manufactured, Cost of Goods Sold Schedule, and an...

Preparing a Schedule of Cost of Finished Goods Manufactured, Cost of Goods Sold Schedule, and an Income Statement.

Listed below is information related to RRR Co’s manufacturing activities for the month of October 2020.

Ending Balance                       Beginning Balance

Materials Inventory                                                                 $197,000                                    $ 211,000

Work in Process Inventory                                                       59,000                                         78,000                    

Finished Goods Inventory                                                        91,000                                           82,000

During October 2020, RRR Company purchased $105,000 of raw materials and incurred direct labor costs of $77,100. The company applies overhead at a rate of 45% of direct labor cost. General, selling and administrative costs amounted to $36,100, and the company sold 39,400 units of its product at a price of $37.84 each.

Directions:

  1. Prepare RRR’s schedule of cost of finished goods manufactured for October 2020.
  2. Determine RRR’s cost of goods sold during October 2020.  
  3. Prepare RRR’s income statement for the month ended October 31,2020 (ignoring interest expense and income taxes)

Solutions

Expert Solution

Ans. A RRR CO.
Schedule of Cost of Goods Manufactured
For the Month of October in 2020
Particulars Amount Amount
Direct materials:
Beginning raw materials inventory $211,000
Add: Purchase of direct materials $105,000
Raw materials available $316,000
Less: Ending raw materials inventory -$197,000
Direct materials used $119,000
Direct labor $77,100
Manufacturing overhead applied $34,695
Total manufacturing costs $230,795
Add: Beginning Work in process inventory $78,000
Less: Ending Work in process inventory -$59,000
Cost of goods manufactured $249,795
*Manufacturing overhead applied = Direct labor cost * Overhead rate
$77,100 * 45%
$34,695
Ans. 2 RRR CO.
Schedule of Cost of Goods Sold
For the Month of October in 2020
Particulars Amount
Cost of Goods Manufactured $249,795
Add: Beginning finished goods inventory $82,000
Cost of goods available for sale $331,795
Less: Ending finished goods inventory -$91,000
Cost of goods sold $240,795
Ans. 3 RRR CO.
Income Statement
For the Month Ended October 2020
Particulars Amount
Sales (39,400 * $37.84) $1,490,896
Less: Cost of goods sold -$240,795
Gross margin $1,250,101
Less: Selling and Administrative cost -$36,100
Operating Income $1,214,001

ekkarill92 answered 2 years ago
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