Question

Alpha Corporation has the following information for the month of August:

Purchases	$ 92,000
Materials inventory, August 1	6,000
Materials inventory, August 31	8,000
Direct labor	25,000
Factory overhead	37,000
Work in process, August 1	32,000
Work in process, August 31	23,500
Finished goods inventory, August 1	21,000
Finished goods inventory, August 31	30,000
Sales	252,000
Sales and administrative expenses	79,000

Prepare (a) a schedule of cost of goods manufactured, (b) an income statement for the month ended August 31,

Answer 1

Alpha Corporation
Schedule of cost of goods manufactured
For the month ended august 31
Direct materials
Raw materials inventory,August 1	6000
ADD: Purchase of raw materials	92000
Raw materials available for use	98000
DEDUCT: Raw materials inventory, august 31	8000
Raw materials used in production		90000
Direct labor		25000
Manufacturing overhead		37000
Total manufacturing costs		152000
ADD: Work in process inventory ,august 1		32000
		184000
DEDUCT:work in process inventory, august 31		23500
Cost of goods manufactured		160500
Alpha Corporation
Income Statement
For the month Ended august 31
Sales		252000
Less: cost of goods sold
Opening finished goods	21000
Add: Cost of goods manufactured	92000
Less: closing finished goods	30000
COGS		83000
Gross profit		169000
Less: Sales and administrative exp		79000
Net profit/(loss)		90000