Question

Apply the Concepts
Scenario 1

Timbre Company manufactures door bells. For the coming year, the company forecasts that 50,000 units will be produced with the following costs:

Direct materials	$231,450
Direct labor	135,000
Variable overhead	45,000
Fixed overhead	675,000

Timbre expects to purchase $215,400 of direct materials. Beginning inventories and projected ending inventories for direct materials and work in process are as follows:

	Direct Materials Inventory	Work-in-Process Inventory
Beginning	$80,100	$112,500
Ending	70,500	90,000

Using the above information for Timbre, prepare a cost of goods manufactured statement, by completing the following table:

Enter all amounts as positive numbers.

Statement of Cost of Goods Manufactured
for the Coming Year
Direct materials
Beginning Inventory	$231,450
Add: Purchases
Materials available	$
Less: Ending inventory
Direct materials used in production		$
Direct labor
Overhead
Total production (manufacturing) costs added		$
Add: BWIP
Less: EWIP
Cost of goods manufactured		$

Apply the Concepts: Scenario 1(a) (a continuation of the Timbre Example)

Assume that Timbre has beginning finished goods of $226,500 and that the ending finished goods is projected to be $67,500. Calculate cost of goods sold by completing the following table:

Prepare a statement of cost of goods sold by completing the following table:

Enter all amounts as positive numbers.

Statement of Cost of Goods Sold
Cost of goods manufactured	$
Add: Beginning finished goods
Goods available for sale	$
Less: Ending finished goods
Cost of goods sold	$

Apply the Concepts: Scenario 1(b) (a continuation of the Timbre Example)

Timbre has budgeted sales of 57,500 units at $43per unit. The selling expense is expected to be $200,000 and general administrative expense is projected at $350,000.

Prepare an operating income statement for Timbre by completing the table below (round dollars to the nearest dollar and percentages to two decimal places):

Enter all values as positive numbers.

Timbre Company
Income Statement
For the Coming Year
			% of sales
Sales		$	100.00
Less: Cost of goods sold
Gross Margin
Less: Operating expenses
Selling expenses	xxx
Administrative expenses	xxx
Operating income		$

Answer 1

Solutions:

Statement of Cost of Goods Manufactured
for the Coming Year
Direct materials:
Beginning Inventory	80100
Add: Purchases	215400
Materials available	295500
Less: Ending inventory	70500
Direct materials used in production		225000
Direct labor		135000
Overhead		720000
Total production (manufacturing) costs added		1080000
Add: BWIP		112500
Less: EWIP		90000
Cost of goods manufactured		1102500
Statement of Cost of Goods Sold
Cost of goods manufactured	1102500
Add: Beginning finished goods	226500
Goods available for sale	1329000
Less: Ending finished goods	67500
Cost of goods sold	1261500
Timbre Company
Income Statement
For the Coming Year
			% of sales
Sales		2472500	100.00%
Less: Cost of goods sold		1261500	51.02%
Gross Margin		1211000	48.98%
Less: Operating expenses
Selling expenses	200000
Administrative expenses	350000	550000	22.24%
Operating income		661000	26.73%