Question

Manufacturing Income Statement, Statement of Cost of Goods Manufactured

Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December.

	On Company		Off Company
Materials inventory, December 1	$88,570		$112,480
Materials inventory, December 31	(a)		127,100
Materials purchased	224,970		(a)
Cost of direct materials used in production	237,370		(b)
Direct labor	333,910		253,080
Factory overhead	103,630		125,980
Total manufacturing costs incurred in December	(b)		727,750
Total manufacturing costs	844,960		998,830
Work in process inventory, December 1	170,050		271,080
Work in process inventory, December 31	143,480		(c)
Cost of goods manufactured	(c)		721,000
Finished goods inventory, December 1	149,680		125,980
Finished goods inventory, December 31	156,770		(d)
Sales	1,305,520		1,124,800
Cost of goods sold	(d)		727,750
Gross profit	(e)		(e)
Operating expenses	170,050		(f)
Net income	(f)		249,710

Required:

1. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers.

Letter	On Company	Off Company
a.	$	$
b.	$	$
c.	$	$
d.	$	$
e.	$	$
f.	$	$

2. Prepare On Company's statement of cost of goods manufactured for December.

On Company
Statement of Cost of Goods Manufactured
For the Month Ended December 31
			$
Direct materials:
	$
	$
		$
Total manufacturing costs incurred during December
Total manufacturing costs			$
			$

3. Prepare On Company's income statement for December.

On Company
Income Statement
For the Month Ended December 31
		$
Cost of goods sold:
	$
	$
		$
		$

Answer 1

1	Missing items Computation
	Letter	On Company	Off Company
	a	76170	363310
	b	674910	348690
	c	871530	548910
	d	864440	119230
	e	441080	397050
	f	271030	147340
2	Statement of Cost of Goods Sold Manufactured
	For the Month Ended December 31
		On Company	Off Company
	Materials Inventory, Dec 1	88570	112480
Add	Material Purchased	224970	363310
	Material Available for Use	313540	475790
Less	Materials Inventory, Dec 31	76170	127100
	Raw Material Used	237370	348690
Add	Direct Labour	333910	253080
	Prime Cost	571280	601770
Add	Factory Overhead	103630	125980
	Total Manufacturing costs Incurred in December	674910	727750
B/F	Other Factory Costs	170050	271080
Given	Total Manufacturing Costs	844960	998830
Add	WiP Inventory on Dec 1	170050	271080
	Cost of Goods to be manufactured	1015010	1269910
Less	WiP Inventory on Dec 31	143480	548910
	Cost of Goods Manufactured	871530	721000
3	Income Statement
	Sales	1305520	1124800
Less	Cost of Goods Sold	864440	727750
	Gross Profit	441080	397050
Less	Operating Expenses	170050	147340
	Net Income	271030	249710

	On Company	Off Company	Remarks
Materials Inventory, Dec 1	88570	112480
Materials Inventory, Dec 31	a	127100	a = 88570+224970-237370
Material Purchased	224970	a	a = 112480+a-b(i.e., 348690) =127100, so a = 363310
Cost of Direct Material used for Production	237370	b	b = 727750-125980-253080
Direct Labour	333910	253080
Factory Overhead	103630	125980
Total Manufacturing costs Incurred in December	b	727750	b = 237370+333910+103630
Total Manufacturing Costs	844960	998830
WiP Inventory on Dec 1	170050	271080
WiP Inventory on Dec 31	143480	c	c = 998830+271080-721000
Cost of Goods Manufactured	c	721000	c= 844960+170050-143480
Finished Goods on Dec 1	149680	125980
Finished Goods on Dec 31	156770	d	d = 125980+721000-727750
Sales	1305520	1124800
Cost of Goods Sold	d	727750	d = 149680+871530-156770
Gross Profit	e	e	e = Sales - Cost of Goods Sold
Operating Expenses	170050	f	f= Gross Profit - Net Income
Net Income	f	249710	f= Gross Profit - Operating Expenses

Computed Total Figures
	On Company	Off Company
Materials Inventory, Dec 1	88570	112480
Materials Inventory, Dec 31	76170	127100
Material Purchased	224970	363310
Cost of Direct Material used for Production	237370	348690
Direct Labour	333910	253080
Factory Overhead	103630	125980
Total Manufacturing costs Incurred in December	674910	727750
Total Manufacturing Costs	844960	998830
WiP Inventory on Dec 1	170050	271080
WiP Inventory on Dec 31	143480	548910
Cost of Goods Manufactured	871530	721000
Finished Goods on Dec 1	149680	125980
Finished Goods on Dec 31	156770	119230
Sales	1305520	1124800
Cost of Goods Sold	864440	727750
Gross Profit	441080	397050
Operating Expenses	170050	147340
Net Income	271030	249710