Question

Alhambra Aluminum Company, a manufacturer of recyclable soda cans, had the following inventory balances at the beginning and end of 20x1.

   

Inventory Classification	January 1, 20x1				December 31, 20x1
Raw material		$	60,000			$	70,000
Work in process			120,000				115,000
Finished goods			140,000				165,000

  

During 20x1, the company purchased $260,000 of raw material and spent $400,000 for direct labor. Manufacturing overhead costs were as follows:

Indirect material	$	10,000
Indirect labor		23,000
Depreciation on plant and equipment		100,000
Utilities		23,000
Other		30,000

  

Sales revenue was $1,111,000 for the year. Selling and administrative expenses for the year amounted to $110,000. The firm's tax rate is 40 percent.

1.

value:
3.30 points

Required information

Required:

1.	Prepare a schedule of cost of goods manufactured.

     

References

eBook & Resources

ExerciseLearning Objective: 02-01 Explain what is meant by the word cost.Learning Objective: 02-06 Prepare a schedule of cost of goods manufactured, a schedule of cost of goods sold, and an income statement for a manufacturer.

Difficulty: MediumLearning Objective: 02-03 Describe the role of costs in published financial statements.

Check my work

2.

value:
3.30 points

Required information

2.	Prepare a schedule of cost of goods sold.

     

References

eBook & Resources

ExerciseLearning Objective: 02-01 Explain what is meant by the word cost.Learning Objective: 02-06 Prepare a schedule of cost of goods manufactured, a schedule of cost of goods sold, and an income statement for a manufacturer.

Difficulty: MediumLearning Objective: 02-03 Describe the role of costs in published financial statements.

Check my work

3.

value:
3.40 points

Required information

3.	Prepare an income statement.

     

Answer 1

1. Cost of goods manufactured :

Beginning work in process			120000
Beginning raw material inventory	60000
Raw material purchase	260000
Less: Ending raw material inventory	(70000)
Raw material used		250000
Direct labour		400000
Manufacturing overhead :
Indirect material	10000
Indirect labour	23000
Depreciation on plant and equipment	100000
Utilities	23000
Others	30000	186000
Total manufacturing cost			836000
Total cost of work in process			956000
Less: Ending work in process			(115000)
Cost of goods manufactured			841000

Cost of goods sold schedule :

Beginning finished goods inventory	140000
Cost of goods manufactured	841000
Cost of goods available for sold	981000
Less: Ending finished goods inventory	(165000)
Cost of goods sold	816000

3. Income statement :

Sales	1111000
Less: Cost of goods sold	(816000)
Gross profit	295000
Less: Selling and administrative exp	(110000)
Income before tax	185000
Less: Income tax	(74000)
Net income	111000