Question

Consider the following account balances (in thousands) for the Canseco companies:

	Beginning	Ending
Direct materials inventory	$500,000	$875,000
Work-in-process inventory	125,000	250,000
Finished-goods inventory	250,000	625,000
Purchases of direct materials		1,250,000
Direct manufacturing labor		1,625,000
Indirect manufacturing labor		150,000
Plant insurance		65,000
Depreciation—plant, building, and equipment		185,000
Plant utilities		105,000
Repairs and maintenance—plant		95,000
Equipment leasing costs		352,500
Miscellaneous Plant Costs		35,000
Plant Utilities		75,000
Marketing, distribution, and customer-service costs		575,000
General and administrative costs		425,000

1. Prepare a schedule for the cost of goods manufactured for 2018.
2. Revenues (in thousands) for 2018 were $7,500,000. Prepare the income statement for 2018

Answer 1

Canseco companies

Schedule of cost of goods manufactured

direct materials	8,75,000
(begining inventory + purchases + ending inventory)
add ; direct labour cost	16,25,000
Total manufacturing cost	25,00,000
add ; begining work in progress inventory	1,25,000
less ; ending work in progress inventory	2,50,000
Cost of goods manufactured	23,75,000

Income statement for the year ended 2018

Revenue (sales)	75,00,000
less ; Cost of goods sold	3,75000
(begining inventory + purchases - ending inventory)
less ; direct manufacturing labour	16,25000
gross profit	55,00,00
expenses ;
indirect manufacturing labour	1,50,000
plant insurance	65,000
depreciation - plant ,building & equipment	1,85,000
plant utilities	1,05000
repairs and maintanance - plant	95000
equipment leasing cost	3,52,500
miscellaneous plant cost	35000
plant utilities	75000
marketing ,distribution and customer service cost	5,75000
general and administrative costs	4,25,000
Total expenses	20,62,500
Net profit	34,37,500