Question

Materials use in product $120,000 Advertising expense $45,000 Depreciation on plant 60,000 Prperty taxes on plant 19,000 Property taxes on store 7,500 Delivery expense 21,000 Labor costs of assembly-line workers 110,000 Sales commissions 35,000 Factory supplies used 23,000 Saleries paid to sales clerks 50,000 Sales 600,000 Sales return and allowances 15,000 Work-in-process inventory was $22,000 at January 1 and $15,500 at December 31. Finished goods inventory was $65,000 at January 1 and $50,600 at December 31. (a) Compute cost of goods manufactured. (b) Compute cost of goods sold. (c) Prepare Income statement through gross profit.

Answer 1

a)

Schedule of cost of goods manufactured
Direct material used in production	$ 120,000
Labor charges	$ 110,000
Depreciation on plant	$    60,000
Property tax on plant	$    19,000
Factory supplies	$    23,000
Total manufacturing cost	$ 332,000
Add: Beginning work in process inventory	$    22,000
Less: Ending work in process inventory	$    15,500
Cost of goods manufactured	$ 338,500

b)

Cost of goods manufactured	$ 338,500
Add: Beginning finished goods inventory	$    65,000
Less: Ending finished goods inventory	$    50,600
Cost of goods sold	$ 352,900

c)

Sales	$ 600,000
Less: Sales returns and allowances	$    15,000
Net sales		$ 585,000
Less: Cost of goods sold		$ 352,900
Gross profit		$ 232,100

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