Question

QUANTITATIVE ANALYSIS: It is advisable to document all your work and calculations as applicable.

(1) Consider the following account balances in thousands for the Yankee Company for the year ended December 31, 2019:

Direct Materials Inventory, Beginning $58,000

Direct Material Inventory, Ending $32,000

Work in Process, Beginning $38,000

Work in Process, Ending $16,000

Finished Goods Inventory, Beginning $29,000

Finished Goods Inventory, Ending $12,000

Direct Materials Purchased $99,000

Direct Labor $94,000

Indirect Labor $14,000

Plant insurance $29,000

Other insurance $18,000

Salaries – Nonproduction $65,000

Depreciation – plant $15,000

Depreciation – other $10,000

Repairs & Maintenance – plant $38,000

Marketing & Customer support $75,000

Plant rent $18,000

General & Admin $38,000

Required: Prepare a statement of cost of goods manufactured and an income statement for the year ended December 31, 2019, please note sales were $345,000,000

Answer 1

Yankee Company
Statement of Cost of goods Manufactured  (in thousands)
For the month ended December 31, 2019
Direct material
Direct Materials Inventory, Beginning	$    58,000
Add: Purchases	$    99,000
Direct material available for use	$ 157,000
Less:Direct Material Inventory, Ending	$    32,000
Direct meterial used		$ 125,000
Direct Labour		$    94,000
Factory overhead
Indirect Labor	$    14,000
Plant insurance	$    29,000
Depreciation – plant	$    15,000
Repairs & Maintenance – plant	$    38,000
Plant rent	$    18,000
Total factory overhead		$ 114,000
Total Manufacturing Cost		$ 333,000
Add:Beginning work in progress inventory		$    38,000
Less: Ending work in progress inventory		$    16,000
Cost of goods manufactured		$ 355,000

2.

Yankee Company
Income Statement (in thousands)
For the month ended December 31, 2019
Sales		$          345,000
Less: Cost of goods sold
Beginning finished goods inventory	$    29,000
Add: Cost of goods manufactured	$ 355,000
Cost of goods available for sale	$ 384,000
Less: Ending finished goods inventory	$    12,000
Cost of goods sold		$          372,000
Gross Margin		$          (27,000)
Less: Operating expenses
Other insurance	$    18,000
Salaries – Nonproduction	$    65,000
Depreciation – other	$    10,000
Marketing & Customer support	$    75,000
General & Admin	$    38,000
Total operating expenses		$          206,000
Net income (loss)		$        (233,000)

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