Question
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:
- Prepare RRR’s schedule of cost of finished goods manufactured for October 2020.
- Determine RRR’s cost of goods sold during October 2020.
- 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 | |||
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