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Manufacturing Income Statement, Statement of Cost of Goods Manufactured Several items are omitted from the income...

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
CompanyOff
Company

Materials inventory, December 1$75,080 $96,850

Materials inventory, December 31(a) 109,440

Materials purchased190,700 (a)

Cost of direct materials used in production201,210 (b)

Direct labor283,050 217,910

Factory overhead87,840 108,470

Total manufacturing costs incurred in December(b) 626,620

Total manufacturing costs716,250 716,250

Work in process inventory, December 1144,150 233,410

Work in process inventory, December 31121,630 (c)

Cost of goods manufactured(c) 620,810

Finished goods inventory, December 1126,890 108,470

Finished goods inventory, December 31132,890 (d)

Sales1,106,680 968,500

Cost of goods sold(d) 626,620

Gross profit(e) (e)

Operating expenses144,150 (f)

Net income(f) 215,010

Required:

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

LetterOn CompanyOff Company

a.$$

b.$$

c.$$

d.$$

e.$$

f.$$

Feedback

1.

a. The cost of direct materials used in production includes the beginning materials inventory plus purchases, less the ending materials inventory.

b. Total manufacturing costs incurred during December include direct materials, direct labor, and factory overhead.

c. The cost of goods manufactured is beginning work in process plus total manufacturing costs less the ending work in process.

d. The cost of goods sold is the beginning finished goods plus the cost of goods manufactured, less the ending finished goods.

e. Sales minus cost of goods sold equals gross profit.

f. Gross profit minus operating expenses equals net income.

Use similar relationships from On Company to find the missing amounts for the Off Company items (a) through (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

Work in process inventory, December 1 $

Direct materials:

Materials inventory, December 1 $

Purchases

Cost of materials available for use $

Materials inventory, December 31

Cost of direct materials used in production $

Direct labor

Factory overhead

Total manufacturing costs incurred during December

Total manufacturing costs$

Work in process inventory, December 31

Cost of goods manufactured $

Feedback

2. The cost of goods manufactured is the beginning work in process plus the cost of direct materials used in production plus direct labor and factory overhead, less the ending work in process.

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

On Company

Income Statement

For the Month Ended December 31

Sales $

Cost of goods sold:

Finished goods inventory, December 1 $

Cost of goods manufactured

Cost of finished goods available for sale $

Finished goods inventory, December 31

Cost of goods sold

Gross profit $

Operating expenses

Net income $

Solutions

Expert Solution

1.
On Company
(a) Materials inventory, December 31 = 75080+190700-201210 = $64570
(b) Total manufacturing costs incurred in December = $201210+283050+87840 = $572100
(c) Cost of goods manufactured = $572100+144150 - 121630 = $594620
(d) Cost of goods sold = $594620 + 126890 - 132890 = $588620
(e) Gross Profit = $1106680 - 588620 = $518060
(f) Net Income = $518060 - 144150 = $373910

Off Company
(a) Material Purchased = $300240+109440-96850 = $312830
(b) Cost of Direct Material used = $626620 - 108470 - 217910 = $300240
(c) Work in process inventory, December 31 = $626620+233410-620810 = $239220
(d) Finished goods inventory, December 31 = $620810+108470-626620 = $102660
(e) Gross Profit = $968500-626620 = $341880
(f) Operating Expenses = $341880 - 215010 = $126870

2.

Schedule of Cost of Goods manufactured
Direct Materials
Raw Material, Beginning Inventory $         75,080
Add: Purchases $       190,700
Total Raw Material Available $       265,780
Deduct : Raw Material in inventory, ending $         64,570
Raw Material used in production $       201,210
Direct Labor $       283,050
Manufacturing Overhead $          87,840
Total Manufacturing Costs $       572,100
Add: Beginning Work in Process Inventory $       144,150
$       716,250
Deduct: Ending Work in Process Inventory $       121,630
Cost of Goods Manufactured $       594,620

3.

Income Statement
Sales Revenue $    1,106,680
Cost of Goods Sold
Finished Goods Inventory, Beginning $       126,890
Add: Cost of Goods Manufactured $       594,620
Cost of Goods Available for sale $       721,510
Deduct : Finished Goods Inventory, Ending $       132,890
Cost of goods sold $       588,620
Gross Profit $       518,060
Operating Expenses $       144,150
Net Income $       373,910

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